Move Digital restructuring seen strengthening Capital A balance sheet

KUALA LUMPUR: Public Investment Bank believes Capital A Bhd's proposed restructuring of Move Digital Sdn Bhd will bolster its balance sheet and sharpen its focus on core operations, according to analyst Denny Oh. The restructuring exercise is not anticipated to have a significant financial or operational impact on Capital A, as losses from digital businesses, such as Big Pay, have already been acknowledged in the company's records.

Move Digital holds a 99.56% stake in Big Pay Pte Ltd and a 13.6% interest in Tune Protect Group Bhd. The company currently holds net liabilities of approximately RM292 million, primarily consisting of intragroup liabilities, and faces arbitral awards demanding the acquisition of Big Pay's minority shares for USD14.7 million and additional costs of USD4.1 million, plus interest.

The proposed scheme of arrangement aims to settle creditors' claims over a duration of up to three years, with potential funding sourced from market-driven divestment of Big Pay, the orderly sale of Move Digital's stake in Tune Protect, and the recovery of approximately RM32.2 million in related-party receivables. The proceeds from these actions would primarily be distributed to Capital A and its affiliates, subject to regulatory and court approvals.

Oh stated that the proposed scheme and moratorium would not have a material adverse financial or operational impact on the group. He also noted that any disposal or transfer of Move Digital's equity interest in Big Pay is unlikely to affect Capital A, considering that Big Pay's historical losses have already been recognized in the company's financial statements.

The proposed scheme is still in a preliminary stage and subject to further evaluation, including asset and receivable validation, creditor engagement, and ultimately court approval. The scheme is also intended to be recognized in Singapore. Oh retains an "Outperform" rating on Capital A with a target price of 55 sen.