PETALING JAYA: Founder and chairman of LCL Corp Bhd Datuk Low Chin Meng says he is unsure about his next move now that he has lost his grip on the company he founded more than 20 years ago.
“I am disappointed and sad,” a despondent Low told StarBiz yesterday when asked to comment on CIMB Islamic Bank Bhd’s move to sell Low’s remaining stake of 16 million shares, or 11.2%, in the interior fit-out firm in the open market.
“As of today (Tuesday), I am still the chairman but it’s the board’s decision whether they still need me after this,” Low said.
“If you were in my position, what would you do?”
Low’s comments come after it was revealed on Dec 10 that LCL was reeling from debts caused by the financial problems in Dubai, its main revenue generator.
Investors wasted no time in selling down the shares, sending its price to a record low of 21 sen the following day.
Adding to its woes, the company was publicly reprimanded for delays in submitting its financial statements and declared a PN17 status company yesterday.
In a statement to Bursa Malaysia, LCL said that arising from the financial developments in Dubai, there was “heightened uncertainty” to the extent of recoverability of LCL’s debts from the Dubai segment.
“LCL is unable to provide a solvency declaration,” it said.
Due to the tight overall working capital position, the company would also consolidate its financial position and adopt a conservative approach to maximise its “currently limited” resources, it told the stock exchange yesterday.
LCL also warned that the company could face financing and legal challenges in the near term including legal proceedings initiated by lenders and trade creditors.
Despite this, analysts feel the company can still be salvaged.
And the best person for the job is none other than Low, they say.
“If you talk about execution and ability, Low’s the guy. Besides, Dubai is not the end of everything, ” said Yeonzon Yeow, head of research at Kenanga.
“He can pick himself up if someone (banks) gives him a chance.”
Nigel Foo, a CIMB Investment analyst who also tracks the stock concurred, saying: “Nobody knows the business better than Low, no one has the expertise and commitment. I believe he is not going to just walk away.”
On Monday, CIMB Islamic Bank sold the 16 million shares, causing Low to lose control of LCL.
The shares were pledged to CIMB Islamic as security against financing. According to Bursa Malaysia filings, CIMB had invoked its rights under the memorandum of deposit to dispose of the shares in the loss-making firm.
The net proceeds from the disposal of shares was utilised to partially settle the outstanding overdue amount of the facility granted to LCL.
LCL has defaulted on some RM72mil in loans to Affin Bank Bhd and Bank Islam Malaysia Bhd and risks further defaults as the declining property sector in Dubai caused delays and, in some cases, non-payment of its receivables.
The company also borrowed from AMMB Holdings Bhd, Alliance Bank Malaysia Bhd, Bank Muamalat Malaysia Bhd, EON Capital Bhd, Public Bank Bhd, Standard Chartered Plc, Kuwait Finance House and Royal Bank of Scotland plc.
As at Sept 30, LCL’s net debt stood at RM376mil and its net gearing was 4.7 times.
“It’s really not his (Low’s) fault, people didn’t pay him back for the jobs he had completed, so he can’t pay the banks back. What he needs now is for the banks to give him a chance, throw him a lifeline so that he can have fresh working capital to accept new contracts and move on,” Kenanga’s Yeow said.
CIMB’s Foo believes that “if Dubai turns around, LCL can turn around”.
“If it bounces back by next year and collections can be made, it is possible for the firm to turn around. The company also has to work out a restructuring agreement with the banks. If everybody backs out, everybody loses,” he said.
Earlier this month, state investment arm Dubai World jolted markets around the world when it said it was in talks with creditors to restructure US$26bil of debt built up during the emirate’s real estate boom which started in 2003.
LCL was one of the local firms which leveraged on the boom, securing major projects in the multi-million dollar Palm Jumeirah development, the Dubai Metro urban transport system and the Dubai Marina Hotel.
In 2008, LCL derived more than 80% of its sales from Dubai compared with 46% a year earlier. At the close yesterday, shares in the company finished 2 sen higher to 25 sen.
A true Measure of a Man’s Worth
ReplyDeleteI may not have worked with LCL for a long time. In fact, my tenure lasted 1 year after which I decided to leave for Bahrain to join my husband. However, I cannot deny the occasional longing to return, the worry and concern for the company as the economic situation worsens. Also my constant need to reach out to former colleagues sometimes only to say a hello or hear some news about the company. I would jump at an opportunity to return if given the chance.
I have had the past 8 months to contemplate my exact reason for such sentimentality. I seldom feel this attachment to anything, much less a company. It dawned on me that I never saw this organization as a mere business entity. LCL is a family unit made up of extended families living, working and even playing in close quarters. It was a culture that was inherited by the leadership of its Founder, Low Chin Meng. LCL is where dreams can come true, where the self is found, and where we can realize our potentials. LCL is a powerhouse of opportunities and visions and ambitions. The going was never easy, neither is the management sterling to say the least. But it was where we were all given a chance to be more - more hard working, more creative, more strong willed, more independent, more experienced.
My good fortune in this is the opportunity to have seen LCL through Mr. Low’s eyes. Few as it may have been, I was given a chance to accompany Mr. Low at occasional presentations. Many of those who were there or have ever been in the same situation would attest to this – we could all see it – his vision and dedication. We all knew it was achievable and that we would be part of that dream. The gift of conviction and faith can only be given by a man with such strength of character and a tenacity that would put Gandhi to shame. He was a father, friend, superior, mentor, and most of all a leader. He may be kind, patient, tolerant but knows when to deal a firm hand. He can be humble yet stand strong with an air of dignity that’s hard to replicate.
I have been given a gift. I know now what it takes to be a great leader. If a man’s worth is in the benefit others have gained through his success, I found Mr. Low worthy indeed.
Sarina Mokhtar
ex-BDM Dubai 2008/2009
In order to fight the crisis, Dato’ Low made Dubai his second home, running from one meeting to another. Sustaining the company and sourcing for funds are the crucial missions every time he came to Dubai. His undefeated spirits had driven us through most of the problems we faced. Bit by bit through his efforts, we are heading toward the correct direction. Without him, LCL Dubai would not have survived the harsh financial crisis until today. For staffs, he is our mentor and captain of the ship. His role is indispensable not only to the company’s operations but to all employees.
ReplyDeleteI feel blessed that Dato Low is still taking care of his employees’ welfare despite this critical time. We are not being left to fend for ourselves in foreign land. Well, you hardly find another company treating his employees this well during the hard times, ya know. Top management of other companies may just quit when faced with this extremely tough time but not Dato Low! He is the pioneer and founder of LCL. He has to be given the full mandate and power to manage the companies!
ReplyDeleteThere is still so much LCL can offer. In the spirit of “Work as a Team”, we will overcome this period. Gambatte!!! LCL Boleh!!!