PETALING JAYA: Ailing Kinsteel Bhd has announced a slew of corporate exercises for its regularisation plan, including a capital reduction and fundraising of up to RM46.6 million.
The Practice Note 17 (PN 17) company told Bursa Malaysia that it proposes a share capital reduction of 70% from RM83 million to RM24.9 million and the consolidation of every three shares into one share.
The credit from the proposed capital reduction of RM58.1 million will be used to offset its accumulated losses, which stood at RM865 million as at June 30, 2019.
There will be a proposed fundraising of up to RM46.6 million via a special issue of new Kinsteel shares with free warrants (RM35 million) to selected placees including managing director Tan Sri Pheng Yin Huah and Kin Kee Holdings Sdn Bhd; as well as a rights issue of new Kinsteel shares with free warrants (RM11.6 million) to existing shareholders.
The rights issue will entail the issuance of 115.73 million rights shares together with 57.87 million free warrants on the basis of one rights share for every three Kinsteel shares held together with one warrant for every two rights shares subscribed.
Kinsteel also proposes the disposal of five parcels of industrial land with buildings by its subsidiary Perfect Channel Sdn Bhd (PCSB) to SDM Specialty Chemicals Sdn Bhd and Konsortia Etiqa Sdn Bhd for RM140 million.
In addition, Kinsteel and PCSB propose to undertake a debt settlement arrangement for the inter-company debt owed by PCSB to Kinsteel amounting to RM159.7 million as at June 30, 2019.
Under the debt settlement arrangement, PCSB will pay RM47.5 million to Kinsteel from the disposal proceeds and the transfer by PCSB of its 99.99% stake in Kinsteel and Perfect Wiremakers Sdn Bhd to Kinsteel for RM10 million, to be offset against the inter-company debt owed by PCSB to Kinsteel.
Upon the settlement, there will be a debt waiver of the remaining balance of RM102.2 million. Kinsteel also proposes a scheme of arrangement and compromise with its creditors involving total liabilities of RM1.68 billion as at June 30, 2017.
Kinsteel slipped into the PN 17 status on October 26, 2016 after its auditor Messrs Crowe Horwath expressed a disclaimer opinion in its financial statements for the financial year ended June 30, 2016.
Trading in Kinsteel shares has been suspended since January 5, 2018.