$57m syndicated loan shores up ME Specialised Cables/MESC-Jordan

17/05/2015 17:32 AST

Several banks are extending a lifeline to the Middle East Specialised Cables Company/MESC-Jordan with a multimillion dinar syndicated loan.

The company, 49 per cent owned by Saudi Arabia's Middle East Specialised Cables Company, has all the product range of low, medium and high voltage power cables at plants in Mafraq, 60 kilometres north of Amman.

As a public shareholding company listed on the Amman Stock Exchange, MESC-Jordan also manufactures aluminum conductors as well as electrical and building wires.

Under the debt restructuring deal with the Housing Bank, Capital Bank of Jordan, Jordan Commercial Bank, and Jordan Kuwait Bank, MESC-Jordan will also be given a working capital short-term credit besides the long-term financing.

According to the auditor, EY/Jordan, all the assets of MESC-Jordan and its affiliate, MESC for Medium and High Voltage Cables Company, were hypothecated as security for the lending in addition to the affiliated company's guarantee and the endorsement of insurance policies on the company's assets to the agent bank, namely Housing Bank.

At the end of March 31,2015, the company's debts to the banks totalled JD46.2 million and the cost of financing during the first quarter of 2015 stood at JD0.4 million, compared to JD0.6 million in the first quarter of 2014.

The auditor's report showed JD51.7 million in accumulated losses at the end of the first quarter of this year.

"The amount represents 133 per cent of MESC-Jordan's JD38.9 million paid-up capital and, consequently, depicts a JD9.3 million deficit in the shareholders equity," EY/Jordan wrote.



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The annual report disclosed the losses from 2010 until 2014 to be JD11.5 million, JD12.1 million, JD6.4 million, JD3.2 million and JD4.6 million respectively.

The auditor indicated in the quarterly report that the general assembly of shareholders decided in an extraordinary meeting in 2011 to increase the company's capital by JD20 million through a convoluted process.

MESC-Jordan obtained the approval of the Ministry of Industry, Trade and Supply for raising the capital within a three-year grace period from December 5, 2013 to rectify the situation and avoid liquidation.

"But with the interim financial statements under preparation, the company has not yet received the approval of the Jordan Securities Commission," the auditor said.

EY/Jordan added that the quarterly results were prepared on the basis of an ongoing concern company although the financial statements show a deficit in net shareholders equity and operational losses that affect MESC-Jordan's capability to continue.

"The company's potential to continue as an ongoing concern depends on making the most of its assets, meeting its obligations, and completing the procedures for a syndicated loan to restructure the indebtedness," the auditor concluded.

"Signing the syndicated loan agreement, with the aim of restructuring the long-term diminishing loans that are outstanding and extended by the participating banks, was a highly important accomplishment achieved by the company during 2014," MESC-Jordan Chairman Abdul Raouf Al Bitar wrote in the 22nd annual report.

He said in the foreword that the $56.96 million aggregate loan amount, to be repaid over eight years, would greatly support the company's financial position and maintain the liquidity necessary to back up the operational expenditure as well as raise the efficiency of the cash flow in order to fulfill obligations.

"Moreover, the interest rate specified in the syndicated loan agreement is less than the charge in most of the other previous agreements and, subsequently, brings down the financing costs by 11 per cent from those in the past year," Al Bitar indicated. .

Jordan Times