Posted on 10 Feb 2017
Perwaja Holdings Bhd has aborted its proposed regularisation scheme that would have seen a China-based group emerging as a strategic shareholder and its factory shifting towards producing specialised higher value-added stainless steel products.
In a filing with Bursa Malaysia yesterday, the Practice Note 17-category steelmaker said the parties that had signed a master framework agreement (MFA) for the scheme in July 2015 and the subsequent supplemental agreement in March 2016 failed to fulfil the conditions precedent within the specified timeframe.
The signatories were Perwaja, its major unit Perwaja Steel Sdn Bhd (PSSB) and Tianjin Zhiyuan Investment Group Ltd’s unit Zhiyuan International Investment & Holding Group (Hong Kong) Co Ltd.
Given the lapse of time to fulfil the conditions precedent, Perwaja and PSSB had notified Zhiyuan that the agreements had lapsed and expired and that neither party would have any obligation to the other.
“The board will decide on the next course of action, and will make a further announcement in due course,” Perwaja added.
No reason was given for not extending further the validity period of the agreements.
On Nov 14, 2016, Bursa Malaysia Securities had approved Perwaja’s application for an extension of time up to March 30, 2017, to submit its regularisation plan.
Under the now-aborted scheme, the diversified Tianjin-based group, whose core businesses include alloy manufacturing, would inject some RM1.8bil into the loss-making Perwaja and end up with a majority stake of more than 60%.
The current largest shareholder is Tan Sri Abu Sahid Mohamed (pic), who is deemed interested through his shareholdings in Kinsteel Bhd, Maju Holdings Sdn Bhd and other companies.
Also, as part of the agreement, Zhiyuan would transfer innovative, energy efficient and green technology to revamp Perwaja’s factory in Kemaman, Terengganu, so that it would produce stainless steel and steel alloy.
Based on the original tentative timeline, the proposed regularisation scheme was slated for completion by June 2016.
The proposed regularisation exercise would have also involved a proposed par value reduction and share premium reduction, a proposed special issue to Zhiyuan, and a proposed rights issue with warrants, among others. There would also be a debt restructuring exercise.
However, Zhiyuan’s participation in the scheme was conditional on the fulfillment of all the conditions precedent in the MFA.
According to Perwaja’s July 2015 announcement to Bursa Malaysia, the parties would fulfill the conditions precedent within 12 months from the date of MFA or such other later date as the parties may mutually agree on.
