Malaysian offshore shipbuilder Nam Cheong has announced that its independent auditors BDO LLP have cast doubt on its ability to survive.
BDO has drawn attention to a material uncertainty related to going concern in their report on Nam Cheong’s financial statements for 2016.
The auditor’s report points to Nam Cheong’s 2016 net loss of around RM42,771,000 ($9.6m) and the size of the group’s loans amounting to RM948,720,000 ($213.9m). Ominously, around one third of the debt ($62.8m) is related to medium term notes due for payment on 28 August 2017.
These amounts far exceed Nam Cheong’s cash and cash equivalents of RM162,618,000 ($36.7m) which the auditor points out “indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern.”
According to VesselsValue, there are currently 456 OSV vessels on order throughout the world with 450 of these set to be delivered in 2017. Nam Cheong currently has 56 vessels scheduled for delivery this year, far more than any other shipbuilder, and Splash understands that only a small percentage have been committed for sale.
Nam Cheong says the opinion of the auditors remain unqualified, however investors reacted by sending the company’s share price down over 25% to 3.6 cents.
Companies which Leong Seng Keat, Nam Cheong’s CEO, is deemed to have an interest in sold over 3.3m Nam Cheong shares last week.