Posted on 16 Dec 2019
Kinsteel Group Bhd has secured creditors' approval for its scheme of arrangement (SOA) to undertake its regularisation exercise which involved holders of its corporate guarantees to undertake a massive haircut.
The embattled integrated steel maker announced on Friday the scheme creditors had approved the SOA at the court-convened meeting.
Kinsteel said it would proceed to submit an application to the court for the outcome of the meeting to be sanctioned through a court order.
However, there were variations involving the mode of settlement to the non-financial institutions cum corporate guarantees holders.
It said RM25mil value of irredeemable convertible preference shares (ICPS); and RM25mil value of redeemable convertible preference shares (RCPS) would be issued to the two parties instead of RM5mil in RCPS as announced on Sept 24.
To recap, on Sept 24, Kinsteel had asked the financial institutions and holders of corporate guarantees to take a massive haircut of its RM1.68bil in liabilities.
Kinsteel, a Practice Note 17 (PN 17) company, had proposed these creditors accept a proposed debt waiver amounting to RM1.6bil, representing the balance 95.5% of the scheme liabilities as at the cut-off date of June 30,2017.
Financial institutions are owed RM815.20mil or 48.5% of the RM1.68bil in liabilities while non-financial institutions and corporate guarantee holders are owed RM865.60mil or 51.5%.
The haircut is part of Kinsteel’s extensive regularisation exercise to reduce its debts by reducing its share capital, fund raising, disposal of land and seel a compromise with its creditors over its RM1.68bil liabilities.
It proposed a reduction of its issued share capital of RM83mil – comprising 1.049 billion shares of which 7.75mil shares amounting to RM4.20mil held as treasury shares – to RM24.9mil.
