DBS owed S$94.8 million, Teck Wei Credit, S$70 million hearing set for Dec 2

 

[SINGAPORE] A group of companies that include Autobahn Rent A Car and car-sharing service Shariot have filed an application for a High Court moratorium that could prohibit winding-up resolutions, among other things, for a period of six months as they seek a scheme of arrangement.  

 

Since news of the group&rsquo s financial trouble first surfaced on Tuesday (Nov 25), the total number of companies involved has increased to 18 from nine, and total debts across the group are around S$304.2 million, up from an earlier reported figure of about S$180 million.

 

Sanjay Kumar Rai, an appointment holder and minor shareholder in nine of the companies, on Friday applied to the High Court of Singapore for a moratorium pursuant to the Insolvency, Restructuring and Dissolution Act.

 

A 30-day suspension automatically came into force upon the application, but Rai had applied for a six-month moratorium. A case conference has been scheduled for Dec 2, at 9.30 am.

 

In his affidavit, Rai said that the group &ndash which operates vehicle leasing, rental and fleet management businesses &ndash is now encountering difficulties as its expansion had not been matched by demand for its services. He also cited increased operating costs. 

 

The group intends to propose a scheme of arrangement to creditors to restructure its debts and continue its business while honouring the arrears. 

 

Rai added that he is &ldquo confident that a scheme of arrangement is a sustainable alternative to an insolvent liquidation, as it can reverse Autobahn&rsquo s financial plight without prejudicing its creditors&rdquo .

 

The document also named the group&rsquo s creditors.   DBS   : D05 +0.37% is key creditor, with the group owing the bank a total of S$94.8 million. Motor loan company Teck Wei Credit is owed S$70 million

 

List of companies expands to 18

There are now a total of 18 companies represented in the action, including the nine originally named in the letter to creditors issued on Nov 25. 

 

These nine companies are: Shariot, Autobahn Rent A Car, Ah Tan Car Repairs, Bayfront Autohub, Hamilton Capital, Hamilton Autohub, Hamilton Autobahn, Shinsei Rent A Car and RS Carz. 

 

The new entities are: Hamster Car Rental, 88 Auto, WJ Car Rental, We Rent The Car, Rabbit Car Rental, Rising Sun Nippon Corporate, HJ Car Rental, Thundercarz and Rentzilla. 

 

All are private limited companies, except for RS Carz, which is a partnership.

 

Rai&rsquo s affidavit said: &ldquo Each of the companies forms an integral part of the wider Autobahn group operational ecosystem, and their operations are deeply interconnected.&rdquo  

 

It explained that enforcement against a single entity would cripple the others, as vehicles, hirers, financing lines, workshop operations, IT systems and administrative functions overlap across the group.

 

The group&rsquo s present difficulties came to a head when it received a cancellation notice from its fleet insurer on or around Nov 26, stating that all policies would be cancelled unless arrears were paid. The insurer also said it would notify the Land Transport Authority. 

 

Without insurance, the group&rsquo s vehicles would be unable to operate legally, leading to &ldquo defaults under all fleet financing and hire-purchase facilities, enabling lenders to repossess vehicles, enforce mortgages, and accelerate loan obligations&rdquo .

 

The group also received notice that its banks were considering freezing or restricting access to operating accounts, which would cause its operations to cease and trigger &ldquo multiple defaults&rdquo . 

 

This, the affidavit said, would result in devastating consequences and &ldquo undermine the proposed restructuring&rdquo .

 

The group &ldquo significantly expanded&rdquo its fleet after the Covid-19 pandemic as it had anticipated an increase in demand, but this did not materialise. It was also saddled with rising costs over time. 

 

&ldquo (Certificate of Entitlement) premiums increased, insurance premiums escalated, maintenance costs rose, and inflation affected parts, labour and workshop operations,&rdquo the affidavit said.

 

Most debt from fleet expansion

DBS is owed a total of around S$94.8 million from eight of the companies, while Eazy Insurance is a creditor of 12 of the companies, and it is owed about S$1.8 million in total. 

 

Most of the group&rsquo s debt was incurred by Autobahn Rent A Car, which is understood to have a fleet of around 1,700 cars. 

 

A significant portion of Autobahn Rent A Car&rsquo s debt was for the hire-purchase of vehicles, including the S$70 million owed to Teck Wei Credit. It owes S$54.2 million to DBS for working capital, hire-purchase, property and trade financing. 

 

Autobahn&rsquo s other hire-purchase debts include S$22.8 million to auto group Motorway, S$9.8 million to Privilege Motors, S$8.6 million to OCBC, S$2.7 million to HL Bank, and S$2 million to Hong Leong Finance.

 

The company also owes UOB S$9.4 million. 

 

Two major car dealerships are also creditors, both for car-purchase loans. Autobahn owes authorised Toyota dealer Borneo Motors S$7.2 million, and authorised Hyundai dealer Komoco Motors, S$2 million. Toyota Financial Services, an arm of Toyota Motor Corporation, is owed S$25 million by Shinsei Rent a Car.  

 

The group owns multiple properties, including a building at 459 MacPherson Road, three units at 1 Kampong Ampat, and one unit each at 53 Ubi Avenue 1 and 25 Kaki Bukit Road 4. 

 

The affidavit also stated that Tan Boon Kee, the majority shareholder and director of the original nine companies who is also known as Roy Tan, is prepared to sell his personal property &ndash a semi-detached house at Carisbooke Grove &ndash to support the scheme. 

 

It added that the group is in &ldquo advanced discussions with a potential investor or &lsquo white knight&rsquo &rdquo who may participate in the restructuring. Rai did not name the investor, citing confidentiality obligations, but said he could file a sealed affidavit to give the court more information.

 

Don Ho and David Ho of DHA+ Public Accounting Corporation have been appointed as the group&rsquo s joint and several scheme managers. 

Its analysts also upgrade OCBC, SGX to &lsquo overweight&rsquo see volatility for UOB

 

[SINGAPORE] As Singapore&rsquo s financial sector evolves, DBS could get &ldquo unjustifiably expensive&rdquo , and UOB may face volatility over the next six months, said JPMorgan in a note on Friday (Nov 28). 

 

This comes as local banks and the Singapore Exchange (SGX) are set for &ldquo significant improvement in value creation&rdquo over a multi-year period, amid shifts to the financial sector that are currently &ldquo under-appreciated&rdquo , the investment bank said. 

 

It assigned DBS a December 2026 price target of S$70, and upgraded its rating on the SGX to &ldquo overweight&rdquo OCBC was also &ldquo overweight&rdquo , and UOB, &ldquo neutral&rdquo . 

 

JPMorgan analysts Harsh Wardhan Modi and Daniel Andrew Tan believe the counter is likely to re-rate to a point where the stock becomes &ldquo unjustifiably expensive&rdquo .

 

They noted that DBS has restructured towards a lower loan intensity its 2027 loans-to-assets ratio is estimated to stand at 48 per cent, from 63 per cent in 2017. 

 

Modi and Tan said: &ldquo Higher rates, coupled with deposit franchise, should allow (DBS) to sustain net interest income (NII) growth over the next five years, on top of a 2 per cent NII compound annual growth rate in 2024 to 2027.&rdquo  

 

Noting that DBS&rsquo 2026 earnings per share (EPS) is expected to &ldquo mark a low&rdquo for the next five years, the analysts said that its regular distribution per share (DPS) of S$2.88 and part of its special dividend may remain intact. 

 

&ldquo The bank can potentially pay S$3.30 DPS for years to come, in our estimates,&rdquo they said. 

 

Speaking on DBS&rsquo cash DPS commitment, it noted that the lender has committed to paying S$0.66 a quarter in regular cash by Q4 2025, and S$0.72 by Q4 2026. This amounts to 82 per cent of the estimated EPS for 2027 and is a &ldquo significant commitment that only best-in-class banks can make and deliver&rdquo , Modi and Tan said. 

 

JPMorgan noted that UOB has lagged peers in wealth management, with limited organic and inorganic build in the last 15 years, as well as in US dollar-denominated payments and deposits.

 

&ldquo These factors, among others, likely led the bank to take too much risk in areas linked to property in Asia and the US in the last decade, in a bid to generate better returns. Accordingly, we are now witnessing an increase in credit risks,&rdquo JPMorgan said. 

 

While Modi and Tan expect UOB&rsquo s stock to face volatility &ldquo in a wide range&rdquo over the next six months, they have upgraded it to a &ldquo neutral&rdquo rating from an &ldquo underweight&rdquo rating, given that &ldquo it is tough to expect the stock to actively underperform&rdquo . 

 

JPMorgan noted that the SGX is a &ldquo direct beneficiary&rdquo of efforts to revitalise the equity market and increase wealth allocation to Singapore assets. 

 

Noting that the stock has gained 30 per cent in the year to date, they foresee 6 to 7 per cent of further upside to street EPS and upgraded it to &ldquo overweight&rdquo , with a S$18.15 price target for December 2026. 

It made the decision after failing to get approval for its initial request to buy as much as 49%

 

[SINGAPORE] Singapore&rsquo s biggest bank has withdrawn an application to start talks to buy as much as 49 per cent of Alliance Bank Malaysia, replacing it with one to acquire up to 30 per cent instead, people with knowledge of the matter said.

 

DBS Group Holdings made the decision after failing to get approval from the Malaysian central bank for its initial request, which would&rsquo ve required a waiver because generally a company can only buy as much as 30 per cent of a financial institution in the country, the people said.

 

The revised request should have a better chance of being approved by Bank Negara Malaysia, the people said, asking not to be identified because the information is private. 

 

That would pave the way for DBS to engage with Alliance&rsquo s largest shareholder, Vertical Theme, a Malaysian holding company backed by Singapore state investor Temasek Holdings, the people said. Temasek has a 49 per cent stake in Vertical Theme via Duxton Investment & Development. It also holds about 28.3 per cent of DBS.

 

Representatives for DBS and Vertical Theme declined to comment. A spokesperson for Alliance said the company wasn&rsquo t aware of the matter, while the Malaysian central bank didn&rsquo t immediately respond to a request for comment.

 

An Alliance deal would give DBS a footprint in Malaysia, where Singaporean rivals Oversea-Chinese Banking Corp and United Overseas Bank already have a presence. DBS is South-east Asia&rsquo s largest bank by total assets.

Alliance&rsquo s shares have fallen 6 per cent in Kuala Lumpur this year, while the city&rsquo s main benchmark is down less than 2 per cent. Alliance has a market capitalisation of about US$1.9 billion.