EPF initiates legal action against Ireka unit over unpaid contributions

KUALA LUMPUR (May 6): Practice Note 17 (PN17) company Ireka Corp Bhd said its wholly-owned Ireka Development (Terengganu) Sdn Bhd (IDTSB) and the unit’s directors are being sued by the Employee Provident Fund (EPF) over unpaid contributions to the fund.

In a bourse filing on Monday, the construction outfit said EPF is claiming a principal sum of RM50,196, representing total outstanding contribution from August 2023 to December 2023, along with dividends and late payment charges to be determined upon full settlement of the amount claimed.

“IDTSB is currently negotiating a settlement plan with EPF to resolve the amount claimed under the writ,” it said, referring to the writ of summons filed by the EPF.

Ireka said there is no major financial impact from the lawsuit as the claimed amount has been recognised in IDTSB’s financial statements.

Ireka triggered PN17 criteria in August 2020 due to its auditors’ concerns about its ability to continue as a going concern, as its shareholders’ equity fell below the required threshold. It officially entered PN17 status on March 1, 2022, after Bursa Securities rejected its application for an extension of the relief period that was provided during the pandemic.

Since last year, Ireka has been hit by several lawsuits over defaults in payment, including one from AmBank for outstanding debt of RM4.24 million in March 2023 — for which AmBank has petitioned to wind-up Ireka in January this year — and another from RHB Bank for RM6.53 million in February 2024, alleging a default in a revolving credit facility.

Ireka has been in the red for four consecutive quarters since its third quarter ended March 31, 2023 (3QFY2023). It reported a net loss of RM29.44 million for its most recent 2QFY2024, compared to a net profit of RM2.19 million a year earlier, despite quarterly revenue rising to RM19.1 million from RM8.67 million.

As of Dec 31, Ireka had a cash balance of RM6.13 million, with short-term borrowings of RM9.87 million and long-term borrowings of RM71.52 million.

Shares in Ireka settled half a sen or 1.59% higher at 32 sen, giving the group a market capitalisation of RM71.57 million. Year to date, the stock has plummeted 37.86%.