Challenges

Illiquid Loan Receivables

At Sky Motor Sdn Bhd, we've faced a significant challenge in the form of illiquid loan receivables, particularly during periods of financial uncertainty. As a company heavily reliant on short-term funding, these illiquid assets have posed persistent hurdles, affecting our ability to efficiently manage our financial obligations.

This challenge becomes especially pronounced when we need to refinance debt or fulfill maturing obligations. Our limited ability to access cash or liquid assets quickly often leaves us with constrained choices, such as opting for more expensive financing alternatives or engaging in asset sales, often on unfavorable terms. These actions not only escalate our cost of capital but also strain our financial stability, intensifying the complexities of our financial management.

Furthermore, illiquid loan receivables can potentially impact our solvency, where liabilities may surpass our assets. This precarious situation can trigger regulatory actions, credit rating downgrades, and a loss of confidence from both investors and customers. In times of financial turbulence, illiquid assets further exacerbate funding challenges. Risk-averse investors tend to demand higher interest rates and impose stricter terms for loans or investments, making it increasingly challenging for us to secure the necessary funding. Regulatory and compliance concerns also emerge, as financial regulators typically mandate companies to maintain a certain level of liquidity to ensure stability and protect consumer interests. The presence of illiquid loan receivables can subject Sky Motor Sdn Bhd to regulatory scrutiny, potential fines, or operational restrictions, adding to our financial woes.

Exit Challenges of Preference Shares

While Sky Motor successfully raised funds through preference shares, the journey to carry on with a new round of fundraising has encountered significant challenges due to exit-related complexities faced by our preference share investors.

One of the central hurdles confronted by our preference share investors is the inherent illiquidity of these shares. Unlike publicly traded stocks, preference shares are not easily convertible into cash. This illiquidity can result in prolonged holding periods, impacting investors' ability to access funds when needed. The exit process for preference shares demands a thorough and patient approach.

Moreover, accurately determining the fair market value of preference shares can be intricate, particularly without an active secondary market. The valuation of these shares significantly influences the timing and pricing of an exit. This complexity adds to the challenge faced by investors seeking to divest their positions.

Additionally, the limited exit options available within the private market can slow down the exit process for preference share investors. Market conditions and demand for such shares can fluctuate, requiring investors to have a well-thought-out strategy for exiting their investments. Regulatory compliance, risk management, and effective negotiation strategies become essential components of addressing these exit challenges, ensuring that investors can navigate the process smoothly.