FMAccounting.com » Corp. Restructuring

Updates on PN17 Firms & Some Reasons For Firms being classified under PN17 (Practise Note No 17)

slang — Tue, 20 Jul 2010 02:42:58 +0000

Major Reasons For Companies/Firms to Fail

Extracted from Bursa Saham Malaysia, the total PN 17 companies/firms:

(List updated as at 13 July 2010)

ARK RESOURCES BHD ¹
AKN TECHNOLOGY BERHAD ²
AXIS INCORPORATED BERHAD ²
EVERMASTER GROUP BERHAD ²
FOUNTAIN VIEW DEVELOPMENT BERHAD ³
HAISAN RESOURCES BERHAD ³
HO HUP CONSTRUCTION BERHAD ²
HOCK SIN LEONG GROUP BERHAD ³
GULA PERAK BHD ³
IBRACO BERHAD ³
JPK HOLDINGS BERHAD ³
KENMARK INDUSTRIAL CO. (M) BERHAD ³
LCL CORPORATION BHD ³
LIMAHSOON BERHAD ³
LINEAR CORPORATION BERHAD ³
LUSTER INDUSTRIES BHD ²
MALAYSIAN MERCHANT MARINE BERHAD ³
NAM FATT CORPORATION BERHAD ³
NGIU KEE CORPORATION (M) BERHAD ³
NIKKO ELECTRONICS BHD ²
OCI BERHAD ²
OILCORP BERHAD ³
RAMUNIA HOLDINGS BERHAD ³
RHYTHM CONSOLIDATED BERHAD ²
SATANG HOLDINGS BERHAD ²
SELOGA HOLDINGS BERHAD ²
STAMFORD COLLEGE BERHAD ²
SYARIKAT KAYU WANGI BERHAD ²
THE AYER MOLEK RUBBER COMPANY BERHAD ³
TRACOMA HOLDINGS BERHAD ³
TRANSMILE GROUP BERHAD ³
TRIPLC BHD ²
VTI VINTAGE BERHAD ³
WWE HOLDINGS BERHAD ²

¹ Companies that triggered any of the criteria pursuant to Practice Note 17/2005 of the Listing Requirements of Bursa Malaysia Securities Berhad which came into effect on 3 January 2005

² Companies that triggered any of the criteria pursuant to Amended Practice Note 17/2005 of the Listing Requirements of Bursa Malaysia Securities Berhad which came into effect on 5 May 2006.

³ Companies that triggered any of the criteria pursuant to Practice Note 17 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad which came into effect on 3 August 2009.

Some of the major reasons for firms or companies falling into PN17 categories in Bursa Saham Malaysia includes the following:

Companies’ shareholders’ funds are less than 25% of their total paid up capital;
Winding up of some of their subsidiaries and associated companies;
Default in loan interest and principal repayments;
Companies have suspended or ceased their operations;
Companies do not have any significant business or operations;
Receivers have been appointed to take control of the companies’ assets;
Auditors have expressed adverse opinions on the companies

Interestingly, the above are just the outcomes when the companies turned into PN17 companies, the basic underlying reason is that companies are not properly managed – refer to my other articles on what are the mains reasons for companies to fail

Malaysia Foreign Investment Committee Disbanded on 30 th June 2009

slang — Thu, 30 Jul 2009 12:09:13 +0000

For those who are involved with corporate restructuring and other, it is noteworthy to note that our Malaysian Foreign Investment Committee(FIC) which was previously in charge of ensuring the 30% bumiputra quota shareholding requirement in listed companies and property transfer,etc has been officially disbanded on 30 th June 2009. This was announced by our Prime Minister, Dato Seri Najib Razak.

Moving forward, a new department set up at the Economic Planning Unit(EPU) would replace the FIC and would only process transactions involving:

the dilution of bumiputra interests and/or

Government interests in properties valued at RM20mil and above, whether bought directly or indirectly through acquisition of companies owning properties.All other property transactions would no longer require the approval of FIC.However, foreign investors cannot acquire properties below specified threshold limits, with the threshold amount for commercial properties at RM500,000. For the purchase of residential properties, the present threshold of RM250,000 is maintained until the end of 2009, with the threshold increased to RM500,000 effective of Jan 1, 2010.

Companies will still have to comply with Securities Commission’s 25% public spread requirement at the initial public offering (IPO) stage, of which half must be offered to bumiputras, this would be waived if there were insufficient bumiputra investors to buy the shares. This means that effectively, the bumiputra equity ownership requirement has been reduced to 12.5% at the IPO stage. There will no longer be any equity conditions imposed on companies post IPO, except in the case of reverse takeovers and backdoor listings

Commencement of de-listing procedures against KL Infrastructure Group Berhad Under Amended PN-17

slang — Tue, 04 Sep 2007 06:28:12 +0000

Latest hit for De-listing procedure by Bursa Malaysia was KL Infrastructure Group Berhad under the Amended Practice Note No. 17/2005 (“Amended-PN17”).

The Company has failed to comply with the extended timeframe granted by Bursa Securities to submit its regularisation plans to the Securities Commission and other relevant authorities for approval by 31 August 2007

As at 3 September 2007, there are 30 Amended-PN17 companies which represent 3% of the total number of 1,001 companies listed on Bursa Securities. (source:bursamalaysia.com)

Is Your Company A Going Concern Outfit?

slang — Fri, 20 Jul 2007 13:46:13 +0000

As an accountant, one of the basic fundamental convention we alway adhere to is the going concern concept. How then can we see tell-tales of your company not as a going concern outfit?

Some indications and tell-tales are:

loan repayments are falling due in the near future and refinancing facilities are not immediately available
high or increasing debt-to-equity ratios exist ( high gearing)
in the income statement, you notice that most of your profits are eaten up by bank borrowings
your short term and long term borrowings are structured properly- the company’s projects are mainly on long term but the financing shown in the balance sheet are on very short term basis
company’s business is heavily depending on trade creditors and bank overdrafts
there is the inability to take advantage of discounts, the time taken to pay creditors is increasing and suppliers either are imposing cash term/very short term basis or even threaten to sue for the old debts
insufficient stock as a result of inability to buy raw materials
profitability trend is either on a downtrend or deteriorating drastically
normal capex is financed by leasing and other short term financing
company has a net deficiency of current assets or its ratio of current assets to current liabilities is declining
the company is very near to its present borrowing limits with no signs of a reduction in requirements
collection rate from debtors is slowing down
rapid development of business with sign of overtrading
substantial investments in products that still take time to generate the necessary revenue & liquidity
too many yet to succeed joint ventures and unsuccessful R&D on new products
overdependent on a limited number of products, customers or suppliers
evidence of major reductions or cancellations of capital projects
heavility dependence on an overseas holding company for finance or trade
in companies involve in construction business, most of their projects are at tail-end with only the retention monies reflected in the balance sheet and with no sign of any projects coming in.

Next how about churning out ratios using the Altman’s bankruptcy ratio to see for yourself whether insolvency/bankruptcy is on the way.

[ refer audit qualification]

Lafarge’s RM566m Capital Repayment Plan

slang — Thu, 01 Feb 2007 13:02:41 +0000

On Jan 30, Lafarge Malayan Cement Bhd has proposed the following corporate restructuring:

· proposed for capital repayment on the basis of 20 sen for every 50 sen share held by reducing the share capital of 50 sen each to 30 sen each. (Based on the paid-up of RM1.41 billion as at Jan 26, the maximum amount to be distributed would be up to RM566.46 million)

· after the proposed capital repayment and distribution of 20 sen per share, Lafarge would consolidate the resultant share capital of up to 2.83 billion 30 sen shares, on the basis of 10 shares of 30 sen each, into three shares of RM1 each.

· upon completion of the proposed consolidation, the share capital of Lafarge would be RM849.69 million, comprising 849.69 million shares of RM1 each.

With the aforesaid proposals, it’s able to address its high equity base and low gearing position and also to reward its shareholders for their continuous support for the company. Obviously in the long run with the “improve capital structure” re lower equity base there should also be a corresponding improved in the company’s return on equity which benefits the shareholders.

In my earlier article, it’s not only the financial factors that investors look at, it’s also the quality of top management. Usually such responsible management would constantly and consistently review their capital management plans so as to add value to their shareholders for example: too high or too low capital base ( EPS), structured or special dividend policy, unduly high gearing, returning of surplus and idling cash.

Bonia Hits New High On Main Board Transfer

slang — Tue, 30 Jan 2007 02:03:59 +0000

Further to my earlier article, The Star (30/1/07) reported:
“Shares in Bonia Corp Bhd surged to a new high yesterday after the company announced plans to issue free shares, split the stock and seek a transfer to the main board. The stock climbed 40 sen, or 18.2%, to RM2.60, off an intra-day high of RM2.65. A total of 674,100 shares changed hands.Its warrant issue gained 29 sen to RM1.67 “

Anything can happen in a rising share market scenario.

Well, maybe it’s time for some cash-strapped companies to try rights issue( with sweetener-warrants ) to get rid of high debts or restructure its cost of capital. Ironically, if the right issues are well rationale, besides getting the required cash, the share price might go up!!

Bonia Proposes Main Board Transfer, 1-for-2 bonus, Share Split

slang — Mon, 29 Jan 2007 08:28:11 +0000

Bonia Corporation Bhd has proposed a transfer to the Main Board by undertaking the following:

a one-for-two bonus issue of up to 33.67 million new RM1 shares and
a subsequent share split of one share into two 50 sen shares.

As at Jan 24, Bonia had a paid-up capital of RM47.99 million shares comprising 47.99 million shares, with 999,000 outstanding ESOS options and 18.36 million outstanding warrants. The proposed bonus issue will result in its paid-up capital to increase up to RM101.03 million, which pursuant to the share split will comprise 202.06 million shares of 50 sen each.
With this capital restructuring well timed with this upcoming share market, it augur well for the investors of Bonia.
As in my earlier articles, bonus issue is merely an accounting entry to increase the number of shares but not affecting the share capital value, therefore theoretically it should not increase the company’s share price but if it is well timed during a rising share market ( plus other reasons like company’s prospect, etc), it should work wonder for the company’s share price. And coupled with a share split which means more shares – investors will definitely be very happy !. ( Share price at 3/2/2006-$1.20 & whilst on 16/1/07 -$2.24.
The Edge(29/1/07)

PN17 : Ekran To Be De-listed

slang — Wed, 24 Jan 2007 10:24:43 +0000

In a recent case on Corporate Restructuring, Ekran a PN 17 company seemed to get the wrong side of the law when it has submitted its regularization plan to the Bursa Malaysia Securities Bhd and was told that it “fail” to submit the regularization plan to Securities Commission (SC) which might result in Bursa Malaysia de-listing it.
Salient points:

The company is Ekran Bhd, previously a high-flier in the mid-90s which was awarded the contract for the mega Bakun hydroelectric dam project in Sarawak,

Controlled by Sarawakian tycoon Tan Sri Ting Pek Khiing

Its share price, which hit RM12.84 in September 1994, was last traded at 18 sen on Jan 17.

Is a Practice Note PN 17 which supposed to submit its regularization plan to the SC and other relevant authorities for approval (Ekran went into difficulties after the government deferred the multi-billion ringgit dam project during the Asian financial crisis in 1997-98. The scaled-down project is now being undertaken by Sime Darby Bhd.)

Ekran has earlier submitted to Bursa Securities on Dec 29, involved a repayment scheme for all the group’s borrowings, review of the group’s business operations and recovery of the group’s outstanding debts.

However on Jan 18, Bursa Securities rejected the proposed extension as it deemed Ekran have failed to submit its latest rationalisation or recovery plan to the SC for approval.

Ekran in turn announced that the said Dec 29 revamp plan did not require the SC’s approval to implement since it did not involve any capital restructuring or issue of new securities.

The beleaguered company has submitted its appeal to Bursa Securities to defer the suspension on the trading of its securities on Jan 24 and the commencement of de-listing procedures, pending clarification from the Securities Commission (SC),

Following the latest development, Ekran said it had submitted the revamp plan to the SC and is seeking its clarification on whether an approval was required to implement the plan.

It had also appealed to Bursa Securities to defer the suspension on trading of its securities on Jan 24 and commencement of the de-listing procedures, pending the clarification from the SC.

Ekran posted net losses of RM5.68 million on the back of RM2.55 million in revenue for the first quarter ended Sept 30, 2006. It has short-term borrowings of RM131.6 million.

Ting owns 20.06% or 105.51 million shares in Ekran. His outstanding debt to Ekran was RM466.4 million as at Sept 30, 2006 after repaying RM246.5 million via the injection of some assets by Ting and his associates.

(The Edge 18/1/07)

PN17 Company’s FCW Proposes 5-into-1 Capital Reduction

slang — Thu, 18 Jan 2007 11:16:32 +0000

A recent capital re-organization/restructuring by PN17 company –FCW Holdings Bhd which involves firstly a capital reduction with subsequent consolidation and then a further right issue.

Details as follows:

On Jan 12, FCW announced that it would cancel 40 sen of the par value of each of its 50 sen shares and consolidate every five resultant shares of 10 sen each into one share of 50 sen each.;
this capital reduction would result in a credit of RM111.46 million, which together with its audited share premium account of RM9 million as at June 30, 2006 would be used to reduce its accumulated losses totalling RM127.52 million as at June 30, 2006;
furthermore, FCW also proposed a renounceable rights issue of up to 185.77 million shares, with up to 74.31 million free warrants. The rights issue will be on the basis of five shares with two warrants for every existing share at an issue price of 50 sen per rights share after the proposed capital restructuring;
the rights issue would enable FCW to raise funds to finance the proposed acquisition of two properties for a total of RM86 million cash. (Its subsidiary Federal Telecommunicatuons Sdn Bhd is acquiring freehold land and nine independent blocks of warehouses in Kuala Lumpur from Goh Ban Huat Bhd (GBH) for RM55 million. Another subsidiary FCW Industries Sdn Bhd proposed to buy a parcel of freehold land with four adjoining single-storey factories in Kuala Lumpur from GBH Clay Pipes Sdn Bhd for RM31 million.

However, what’s interesting is that FCW chairman Tan Sri Tan Hua Choon has a 10.79% stake in GBH and has undertake to subscribe for his entitlement and excess applications.

It seems like killing two birds with one stone: GBH get cash diffusion from FCW’s right issue(buying GBH’s properties) and FCW able to increase its shareholders’ equity to meet the minimum paid-up capital requirement of RM60 million for companies listed on the Main Board which keeps FCW as a listed status entity.
(The Edge (12/1/07))

AMolek ABORTS Proposed Rights, Bonus Issue

slang — Sun, 08 Oct 2006 02:36:13 +0000

Reported in The Edge Malaysia (5/10/06) that

“The Ayer Molek Rubber Company Bhd (AMolek) has aborted its proposed rights and bonus issue.”

The reason cited is that it is not able to comply with the revised listing requirements on bonus issue that came effect on May 29.

The new rule is that:

“an issuer of a proposed bonus issue had to ensure the necessary reserves required for the capitalisation of the bonus were unimpaired by losses on a consolidated basis, where applicable, based on the lister’s latest audited accounts and quarterly report.”

For AMolek, it had posted a net loss of Rm1.25million for its second quarter ended June 30, 2006.