LCL Corp Bhd's (7177) chairman Datuk Low Chin Meng progressively sold some 28 milion shares a month before major subsidiary, LCL Furniture Sdn Bhd, defaulted in its payment of credit facilities.
"I had instructed for the shares to be sold to help the company pay its loan facilities," Low told Business Times when contacted yesterday.
The move however, did not help steer the group away from defaulting on its loans. The group is now in PN17 status.
LCL Furniture is currently under receivership.
Low raised some RM16 million in the open market through the disposals.
While he has no plans of leaving the group, he would be compelled to adhere to the wishes of shareholders and board members, if they want him to leave. There have been no calls for him to do so yet.
With his own disposals and CIMB Islamic Bank Bhd force-selling 16 million shares belonging to him last Monday, Low no longer owns shares in the interior fit-out company he co-founded 24 years ago.
"Our company still has cash flow, its a little stream that helps us to go about with our job, it's not a cascading waterfall, which is what the banks want," LCL Corp chief executive officer Paul Lim Pang Kiam said after the group's extraordinary general meeting (EGM) in Selangor yesterday.
The EGM was convened to approve a change in auditors for the group to Messrs UHY Diong, with the resignation of Messrs Ernst & Young. The resolution was approved in the meeting, which lasted about 20 minutes.
The company is currently engaging all its lenders and creditors proactively to seek an amicable solution and a way out to resolve the critical issues, which includes a global debt- restructuring scheme.
Lim said despite the board's best efforts of proactively coming up with a debt-restructuring scheme and explaining the situation to their creditors, they could not stop LCL Furniture from going under receivership.
"By pulling the plug, first and foremost, our reputation has been affected. This has set us back and we may have to start from (ground) zero," he said.
The board of directors of LCL group is currently working with the receivers and managers to resuscitate the company.
"We are currently also actively engaging our Dubai clients (on getting payments back on track)," Lim said.
Jobs in Dubai make up about 80 to 90 per cent of LCL Corp's revenue.