General Announcement |
Reference No MM-040914-41491 |
Submitting Merchant Bank |
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AMMERCHANT BANK BERHAD |
Company Name |
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KIA LIM BERHAD |
Stock Name |
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KIALIM |
Date Announced |
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14/09/2004 |
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Type |
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Announcement |
Subject |
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KIA LIM BERHAD
- PROPOSED DEBT RESTRUCTURING SCHEME
- PROPOSED RIGHTS ISSUE |
Contents :
KIA LIM BERHAD (“KIA LIM” or “Company”)
- PROPOSED RENOUNCEABLE TWO-CALL RIGHTS ISSUE WITH WARRANTS OF UP TO 16,948,750 NEW ORDINARY SHARES OF RM1.00 EACH IN THE COMPANY (“RIGHTS SHARES”) TOGETHER WITH UP TO 16,948,750 NEW FREE DETACHABLE WARRANTS (“WARRANTS”) AT A PROPOSED ISSUE PRICE OF RM1.00 FOR ONE (1) RIGHTS SHARE TOGETHER WITH ONE (1) WARRANT ON THE BASIS OF SEVEN (7) RIGHTS SHARES TOGETHER WITH SEVEN (7) WARRANTS FOR EVERY TWENTY (20) EXISTING ORDINARY SHARES HELD ON AN ENTITLEMENT DATE TO BE DETERMINED (“PROPOSED TWO-CALL RIGHTS ISSUE WITH WARRANTS”)
- PROPOSED DEBT RESTRUCTURING SCHEME (“PROPOSED DRS”) INVOLVING THE SETTLEMENT OF OUTSTANDING PRINCIPAL AS AT 31 DECEMBER 2002 (“CUT-OFF DATE”) AND OUTSTANDING INTEREST AS AT CUT OFF DATE UP TO 31 DECEMBER 2003, WITH A COMBINED TOTAL OF RM44,667,924 OWING BY THE SUBSIDIARIES OF KIA LIM TO THE PARTICIPATING BANKERS (“DEFINED HEREIN”) BY WAY OF:
(a) SETTLEMENT OF 40% OF OUTSTANDING PRINCIPAL AS AT CUT-OFF DATE BY THE ISSUANCE OF RM15,716,000 NOMINAL VALUE OF 4%, 10-YEAR REDEEMABLE CONVERTIBLE SECURED LOAN STOCKS OF RM1.00 EACH TO BE ISSUED AT 100% OF ITS NOMINAL VALUE TO THE PARTICIPATING BANKERS;
(b) THE RESTRUCTURING OF 40% OF THE OUTSTANDING PRINCIPAL AS AT CUT-OFF DATE; AND
(c) THE SETTLEMENT OF 20% OF OUTSTANDING PRINCIPAL AS AT CUT-OFF DATE AND OUTSTANDING INTEREST AS AT CUT-OFF DATE UP TO 31 DECEMBER 2003 BY THE ISSUANCE AND ALLOTMENT OF 13,235,924 NEW ORDINARY SHARES OF RM1.00 EACH TO THE PARTICIPATING BANKERS; AND
(III) PROPOSED INCREASE IN THE AUTHORISED SHARE CAPITAL OF KIA LIM FROM RM100,000,000 TO RM200,000,000 BY THE CREATION OF AN ADDITIONAL 100,000,000 NEW ORDINARY SHARES OF RM1.00 EACH (“PROPOSED IASC”)
(collectively referred to as the “Proposals”)
This announcement is dated 14 September 2004.
We refer to the announcement made by AmMerchant Bank Berhad on behalf of the Company with regards to the Proposals on 29 October 2003.
On behalf of the Board of Directors of Kia Lim (“Board”), AmMerchant Bank Berhad wishes to announce that the Securities Commission’s (“SC”) had vide their letter dated 10 September 2004 (received on 13 September 2004) not approved the Proposals.
The SC’s letter states that during the SC's review of the Proposals, the SC noted that based on the audited accounts for the year ended 31 December 2003, Kia Lim can be deemed a distressed listed company as defined per paragraph 13.01(e) of the SC's Policies and Guidelines on the Issue/ Offer of Securities. As required in the said guidelines, any proposal proposed by distressed listed companies must be comprehensive and able to alleviate the financial problems of the company.
After considering the application for the Proposals, the SC has decided not to approve the said application as the Proposals are not comprehensive and unable to solve the financial problem of Kia Lim based on the following:-
i) The Proposed DRS involves essentially an extension of the repayment period and exchange of debt to Redeemable Convertible Secured Loan Stocks (“RCSLS”) with a tenure of ten (10) years, while its equity remains unchanged. Hence, the Company will continue to bear an interest burden on the restructured debt and on the RCSLS;
ii) Kia Lim's existing business activities are not likely to able to support the enlarged share capital (upon the conversion of RCSLS to equity and the exercise of warrants) in the future. The SC had taken note that for the 6-month financial period ended 30 June 2004, Kia Lim had achieved a net profit after taxation of RM0.19 million compared to the profit forecast of RM1.73 million (before implementing the Proposals) for the financial year ending 31 December 2004. The Company also forecast a deficit in the cash flow balance for the financial year ending 31 December 2004 and 31 December 2005 respectively. Further, the Proposals do not involve any injection of new assets which could generate income; and
iii) The Proposed Two-Calls Rights Issue With Warrants amounting to 16.9 million shares at an issue price of RM1.00 per share generates a total proceed of RM9.8 million (based on a first call price of RM0.58 per share).
The Proposed Two-Calls Rights Issue With Warrants in relation to the Proposals is not viable based on the following:-
i) The second call of RM0.42 per share which is proposed to be capitalised from the share premium reserve of RM7.1 million will result in an issue of securities that are not backed by assets. This is due to the fact that the Company’s entire share premium reserve of RM7.28 million is deemed “exhausted” based on the fact that the Company has a shareholders’ funds of RM20.76 million when compared to an issued and paid-up share capital of RM44.58 million as at 30 June 2004 (i.e. Kia Lim has lost more than 50% of its issued and paid-up share capital as a result of its accumulated losses); and
ii) The proposed creditor undertakings to subscribe for the 8.696 million of new shares pursuant to the Proposed Two-Calls Rights Issue With Warrants which is not subscribed by entitled shareholders of Kia Lim, which will be net-off against an amount of RM5.185 million owing by Kia Lim to the said creditors, will result in excessive payment to the said creditors. This is because the 8.696 million new shares is priced at a cash call of RM0.58 per Rights Share when compared to the theoretical market price after the Proposed Two-Calls Rights Issue of RM0.70 per share. Also, the abovementioned creditors will be entitled to the free warrants attached to the Proposed Two-Calls Rights Issue.
The Board will be appealing to the SC as the Board firmly believes the Proposals are in the interest of the Company. |
