News
Advance Synergy Berhad ("ASB" Or "The Company") - Proposed Restructuring Involving The Bank Borrowings In Us Dollars ("USD"), Australian Dollar ("AUD") And Ringgit Malaysia ("RM") Of ASB And Five (5) Of Its Subsidiaries Equivalent To An Amount Estimated At Approximately RM369.159 Million Calculated Up To 29 February 2000 By Way Of An Issue Of Redeemable Loan Stocks ("RLS") And Convertible Loan Stocks ("CLS") With Detachable Warrants ("Proposed Restructuring Of Bank Borrowings"); And - Proposed Renounceable Restricted Offer For Sale Of The Rights To Allotment Of Up To A Maximum Of Approximately 168.897 Million Warrants After The Proposed Restructuring Of Bank Borrowings By The Lenders To The Entitled Stockholders Of ASB ("Proposed Ros"). (Collectively Referred To As "The Proposals")
BackOct 01, 1999
| General Announcement Reference No MM-991001-66232 |
| Submitting Merchant Bank | : | PERDANA MERCHANT BANKERS BERHAD |
| Company Name | : | ADVANCE SYNERGY BERHAD |
| Stock Name | : | ASB |
| Date Announced | : | 01/10/1999 |
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| Type | : | Announcement |
| Subject | : | ADVANCE SYNERGY BERHAD ("ASB" OR "THE COMPANY") - Proposed Restructuring Involving The Bank Borrowings in US Dollars ("USD"), Australian Dollar ("AUD") And Ringgit Malaysia ("RM") Of ASB And Five (5) Of Its Subsidiaries Equivalent To An Amount Estimated At Approximately RM369.159 Million Calculated Up To 29 February 2000 By Way Of An Issue Of Redeemable Loan Stocks ("RLS") And Convertible Loan Stocks ("CLS") With Detachable Warrants ("Proposed Restructuring Of Bank Borrowings"); and - Proposed Renounceable Restricted Offer For Sale Of The Rights To Allotment Of Up To A Maximum Of Approximately 168.897 Million Warrants After The Proposed Restructuring Of Bank Borrowings By The Lenders To The Entitled Stockholders Of ASB ("Proposed ROS"). (collectively referred to as "the Proposals") |
Contents :
1. INTRODUCTION
On 6 January 1999, it was announced that the Company proposed to issue convertible loan stocks with detachable warrants as repayment for the existing banking facilities of ASB and its offshore subsidiaries' bank borrowings.
Subsequent to the announcement, ASB has held several discussions with its lenders, comprising secured, partially secured and unsecured financial institutions (collectively "Lenders") in respect of the Company's Proposals under the auspices of the Corporate Debt Restructuring Committee, Bank Negara Malaysia.
On behalf of the Board of Directors of ASB, Perdana Merchant Bankers Berhad ("Perdana Bankers") is pleased to announce that the approvals of the Lenders have been secured in respect of the Proposals. A Restructuring Agreement has been entered into between ASB and the Lenders on 1 October 1999.
Subsequent to the announcement, ASB has held several discussions with its lenders, comprising secured, partially secured and unsecured financial institutions (collectively "Lenders") in respect of the Company's Proposals under the auspices of the Corporate Debt Restructuring Committee, Bank Negara Malaysia.
On behalf of the Board of Directors of ASB, Perdana Merchant Bankers Berhad ("Perdana Bankers") is pleased to announce that the approvals of the Lenders have been secured in respect of the Proposals. A Restructuring Agreement has been entered into between ASB and the Lenders on 1 October 1999.
2. PROPOSED RESTRUCTURING OF BANK BORROWINGS
ASB proposes to restructure the bank borrowings of the Company and its five subsidiaries as at the date of issue (estimated to be 29 February 2000) amounting to approximately RM369.159 million ("Restructured Bank Borrowings"), via implementation of the following:-
(i) Proposed issuance of approximately RM185.874 million nominal value of 5-year 7% RLS by ASB in exchange for the bank borrowings in USD, AUD or RM of ASB and its five subsidiaries equivalent to the sum of RM185.874 million due and owing to the Lenders. The amount of RLS to be issued was determined based on 60% of the secured portion of the Restructured Bank Borrowings.
The indicative terms of the RLS are set out in Table 1.
(ii) The balance of the bank borrowings in USD, AUD or RM of ASB and its five subsidiaries equivalent to approximately RM183.285 million of the Restructured Bank Borrowings (or such higher amount to take into account any interest that will commence to accrue from 1 March 2000 up to the date of issue of the RLS and/or CLS) will be converted into approximately RM183.285 million nominal value (or such higher amount to reflect the aforementioned increase in the balance outstanding) of 5-year 7% CLS.
The indicative terms of the CLS are set out in Table 2.
(iii) A total of up to approximately 168.897 million detachable warrants ("Warrants") will be issued together with the RLS and CLS to the Lenders on a basis which reflects the proportionate outstanding amount due to each lender as compared to the total outstanding amount due to the Lenders.
The indicative terms of the Warrants are set out in Table 3.
(i) Proposed issuance of approximately RM185.874 million nominal value of 5-year 7% RLS by ASB in exchange for the bank borrowings in USD, AUD or RM of ASB and its five subsidiaries equivalent to the sum of RM185.874 million due and owing to the Lenders. The amount of RLS to be issued was determined based on 60% of the secured portion of the Restructured Bank Borrowings.
The indicative terms of the RLS are set out in Table 1.
(ii) The balance of the bank borrowings in USD, AUD or RM of ASB and its five subsidiaries equivalent to approximately RM183.285 million of the Restructured Bank Borrowings (or such higher amount to take into account any interest that will commence to accrue from 1 March 2000 up to the date of issue of the RLS and/or CLS) will be converted into approximately RM183.285 million nominal value (or such higher amount to reflect the aforementioned increase in the balance outstanding) of 5-year 7% CLS.
The indicative terms of the CLS are set out in Table 2.
(iii) A total of up to approximately 168.897 million detachable warrants ("Warrants") will be issued together with the RLS and CLS to the Lenders on a basis which reflects the proportionate outstanding amount due to each lender as compared to the total outstanding amount due to the Lenders.
The indicative terms of the Warrants are set out in Table 3.
3. PROPOSED ROS
After the issuance of the loan stocks, the Lenders will detach the Warrants from the RLS and CLS and undertake the proposed renounceable restricted offer for sale of the rights to allotment of up to approximately 168.897 million Warrants to the entitled stockholders of ASB on the basis of one (1) Warrant for every two (2) existing stock units of RM1.00 each held at a proposed offer price of RM0.20 per Warrant.
The gross proceeds estimated at approximately RM33.779 million arising from the Proposed ROS will accrue entirely to the Lenders as upfront payment pursuant to the Proposed Restructuring of Bank Borrowings.
4. RANKING OF THE NEW STOCK UNITS TO BE ISSUED
The ASB new stock units of RM1.00 each to be issued upon the conversion of the CLS and exercise of Warrants shall rank pari passu in all respects with existing ASB stock units of RM1.00 each except that they will not rank for any dividends or other distributions declared in respect of a financial period prior to the financial period in which the ASB new stock units are issued or for any interim dividends or distributions that may be declared prior to the date of allotment of the ASB new stock units.
5. RATIONALE FOR THE PROPOSALS
5.1 Proposed Restructuring Of Bank Borrowings
The recent economic downturn has adversely affected the ASB Group which is involved in, among others, the finance and hotel sectors. With significant lower contribution from both its finance and hotel divisions, the bank borrowings servicing capability of the Group has been impaired to a certain extent. As part of its proactive approach to address the well being of the Company, its creditors and stockholders, ASB intends to implement the Proposed Restructuring Of Bank Borrowings so that the existing bank borrowings and interest obligations of the Group could better match its cash flow.
As the bank borrowings outstanding with the Lenders are largely secured, the realisation of the security pledged to the Lenders will severely affect the operations and well-being of ASB, which could in turn be detrimental to the Company and its stockholders. The Proposed Restructuring of Bank Borrowings will therefore allow ASB to retain the assets pledged to the Lenders and to continue operations as usual.
As the bank borrowings outstanding with the Lenders are largely secured, the realisation of the security pledged to the Lenders will severely affect the operations and well-being of ASB, which could in turn be detrimental to the Company and its stockholders. The Proposed Restructuring of Bank Borrowings will therefore allow ASB to retain the assets pledged to the Lenders and to continue operations as usual.
5.2 Proposed ROS
The Proposed ROS will provide the stockholders of ASB with the opportunity to purchase the Warrants which grant them the rights to subscribe to new stock units in ASB at a pre-determined exercise price over a period of time. In addition, the exercise of the Warrants will enable the stockholders to minimise the dilution of their stockholdings as a result of the conversion of CLS. Moreover, the exercise of the Warrants will raise additional funds for ASB to redeem part of the RLS and/or CLS as well as to finance the future growth of the ASB Group's operations.
(i) Share Capital
Assuming full exercise of Warrants and full conversion of CLS, the Proposed Restructuring of Bank Borrowings will increase the issued and paid-up share capital of ASB from the existing amount of RM337,793,619 to an estimated amount of RM685,698,884 comprising 685,698,884 stock units of RM1.00 each.
The Proposed ROS will not have any effect on the share capital of ASB.
The Proposed ROS will not have any effect on the share capital of ASB.
(ii) Net Tangible Assets ("NTA")
Based on the audited accounts as at 31 December 1998, the proforma effects of the Proposed Restructuring of Bank Borrowings on the NTA of the ASB Group will be to increase the consolidated NTA from RM338,225,000 to RM719,932,000. The NTA per stock unit will increase from RM1.00 to RM1.05.
The Proposed ROS will not have any effect on the proforma NTA of ASB.
(iii) Earnings
(iv) Gearing
(v) Shareholding Structure
The Proposed Restructuring of Bank Borrowings is not expected to have any material effect on the ASB Group's earnings for the financial year ending 31 December 1999 as it is expected to be completed in the first quarter of 2000. However, the Directors expect the Proposed Restructuring of Bank Borrowings to have a positive effect on the ASB Group's earnings and cash flows in the future.
(iv) Gearing
The Proposals, assuming full redemption of RLS and full conversion of CLS, will reduce the gearing ratio of the ASB Group from 2.71 times as at 31 December 1998 to 0.41 times (excluding the portion of the loan from Danamodal Nasional Berhad to the UMG Group which has been repaid).
(v) Shareholding Structure
The Proposals will result in the Lenders holding 179,008,416 stock units of RM1.00 each or 26% of the enlarged issued and paid-up capital of ASB, assuming full exercise of the Warrants and full conversion of the CLS.
7. APPROVALS REQUIRED
The Proposals are conditional upon the approvals of the following:-
(i) Bank Negara Malaysia;
(ii) Securities Commission ("SC");
(iii) Foreign Investment Committee;
(iv) Registrar of Companies for the registration of prospectus for the Proposed ROS;
(v) Lenders (already obtained);
(vi) Stockholders of ASB at an Extraordinary General Meeting ("EGM") to be convened;
(vii) KLSE for the admission to the Official List and the listing of and quotation for the Warrants and new stock units of RM1.00 each in ASB to be issued pursuant to the exercise/conversion of Warrants and CLS; and
(viii) Any other relevant authorities/parties.
The Proposals do not fully comply with the current guidelines of the SC pertaining to the following:-
? Exercise/Conversion Price Of Warrants/CLS
(i) Bank Negara Malaysia;
(ii) Securities Commission ("SC");
(iii) Foreign Investment Committee;
(iv) Registrar of Companies for the registration of prospectus for the Proposed ROS;
(v) Lenders (already obtained);
(vi) Stockholders of ASB at an Extraordinary General Meeting ("EGM") to be convened;
(vii) KLSE for the admission to the Official List and the listing of and quotation for the Warrants and new stock units of RM1.00 each in ASB to be issued pursuant to the exercise/conversion of Warrants and CLS; and
(viii) Any other relevant authorities/parties.
The Proposals do not fully comply with the current guidelines of the SC pertaining to the following:-
? Exercise/Conversion Price Of Warrants/CLS
The SC requires that the exercise/conversion price of the Warrants/CLS to be fixed at a premium over the weighted average price of ASB stock units for the five (5) market days preceding the price-fixing date (i.e. the period between SC's approval and books closure date).
ASB, however, proposes to fix the exercise and conversion prices of the Warrants and CLS in respect of the Proposals at RM1.00 per stock unit and RM1.20 per stock unit respectively prior to the application to the SC. In the event that on maturity date, the three (3)-month weighted average market price of ASB stock units prior to the maturity date is below RM1.20 per stock unit but above RM1.00 per stock unit, ASB shall compensate the Lenders through the issuance of ASB new stock units at the three (3)-month weighted average market price or the par value, whichever is the higher.
If the three (3)-month weighted average market price prior to the maturity date is below the par value of ASB stock units, the difference between the RM1.20 per stock unit and the par value will be satisfied through the issuance of ASB new stock units at the par value of RM1.00 per stock unit, and the difference between the par value and the three (3)-month weighted average market price shall be paid in cash.
If the three (3)-month weighted average market price prior to the maturity date is below the par value of ASB stock units, the difference between the RM1.20 per stock unit and the par value will be satisfied through the issuance of ASB new stock units at the par value of RM1.00 per stock unit, and the difference between the par value and the three (3)-month weighted average market price shall be paid in cash.
The Company will, via Perdana Bankers, submit the appropriate application to the SC to seek its approval on the above deviation.
8. DIRECTORS' AND SUBSTANTIAL STOCKHOLDERS' INTERESTS
None of the Directors and/or substantial stockholders of ASB and persons connected with them have any interest, direct or indirect, in the Proposals.
9. ADVISERS
Perdana Bankers has been appointed as the Adviser for the Proposals.
The Directors of ASB, after due consideration of the Proposals, are of the opinion that the Proposals are in the long term interests of ASB.
11. APPLICATION TO THE SC
The submission to the SC in respect of the Proposals is expected to be made within three (3) months from the date of this announcement.
12. OTHER MATTERS
A circular setting out further details of the Proposals and the Notice of EGM will be despatched to ASB's stockholders in due course.
A copy of the Restructuring Agreement dated 1 October 1999 pertaining to the Proposals will be made available for inspection at the registered office of ASB at Level 29, Menara Shahzan Insas, 30 Jalan Sultan Ismail, 50250 Kuala Lumpur, during normal office hours from Mondays to Fridays (except public holidays) for a period of two (2) weeks from the date of this announcement.
This announcement is dated 1 October 1999.
A copy of the Restructuring Agreement dated 1 October 1999 pertaining to the Proposals will be made available for inspection at the registered office of ASB at Level 29, Menara Shahzan Insas, 30 Jalan Sultan Ismail, 50250 Kuala Lumpur, during normal office hours from Mondays to Fridays (except public holidays) for a period of two (2) weeks from the date of this announcement.
This announcement is dated 1 October 1999.
Table 1: Indicative terms of the RLS
| 1. | Issue Size | : | Estimated at RM185.874 million nominal value. |
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| 2. | Form and Denomination | : | The RLS will be issued in registered form and in integral amounts of RM1.00, AUD1.00 or USD1.00 as the case may be. |
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| 3. | Coupon Rate | : | Fixed rate of 7.0% per annum. Interest of 3.0% per annum shall be payable annually and the remaining interest of 4.0% per annum shall be cumulative up to the date of redemption and shall be paid in cash on the redemption date. |
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| 4. | Convertibility | : | Not convertible. |
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| 5. | Maturity Date | : | Five (5) years from the date of issue of the RLS. |
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| 6. | Redemption Price | : | Redemption Date Redemption price for each RLS computed based on a yield of 9% per annum End of the third year from date of issue RM0.95* End of the fourth year from date of issue RM0.98* End of the fifth year from date of issue RM1.01* |
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* Estimated based on the Restructured Bank Borrowings as at 29 February 2000, the date of issue of the RLS. The redemption price may be adjusted to provide a yield of 9%. |
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| 7. | Redeemability | : | Redemption Date % of RLS to be redeemed End of the third year Up to 20% of the RLS issued from date of issue End of the fourth year Up to 30% of the RLS issued from date of issue End of the fifth year The balance of the RLS issued from date of issue |
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In the event the RLS are denominated in foreign currency such as US Dollars or Australian Dollars, the exchange rate shall be determined by referring to the average of the opening selling and buying rates quoted by Malayan Banking Berhad (MBB), or a mutually agreed bank if quotation from MBB is not possible for whatever reasons, at the date of redemption. ASB may, at any time, redeem all or part of the RLS from the RLS holders at a price equivalent to a yield of 9% per annum after taking into consideration the proceeds received by the loan stock holders from the Proposed ROS and the total interest received on the RLS as at the date of redemption. |
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| 8. | Listing | : | The RLS will not be listed on any stock exchange and will not be tradable . |
Table 2: Indicative terms of the CLS
| 1. | Issue Size | : | Estimated at RM183.285 million nominal value (or such higher amount to take into account any interest that will commence to accrue from 1 March 2000 up to the date of issue of the RLS/CLS). |
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| 2. | Form and Denomination | : | The CLS will be issued in registered form and in integral amounts of RM1.00, AUD1.00 or USD1.00 as the case may be. |
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| 3. | Coupon Rate | : | Fixed rate of 7.0% per annum. Interest of 3.0% per annum shall be payable annually and the remaining interest of 4.0% per annum shall be cumulative up to:- ? the date of repurchase and shall be paid in cash on the redemption date; or ? the date of conversion and shall be utilised to satisfy the Conversion Price. |
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| 4. | Convertibility | : | Convertible into new stock units in ASB of RM1.00 each after three (3) years from the date of issue of the RLS. |
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| 5. | Conversion Rights | : | Each RM1.00 nominal amount of CLS together with the accumulated interest can be converted into one (1) new stock unit in ASB of RM1.00 each at the Conversion Price at the conversion period as stated below: |
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Conversion Period % of CLS to be converted Conversion year commencing Up to 20% of the CLS issued from the end of the third year from date of issue Conversion year commencing Up to 30% of the CLS issued from the end of the fourth year from date of issue End of the fifth year The balance of the CLS issued from date of issue |
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| 6. | Maturity Date | : | Five (5) years from the date of issue of the CLS. |
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| 7. | Proposed Conversion Price | : | Subject to the approvals of the relevant authorities and adjustments under certain circumstances in accordance with the Deed Poll constituting the CLS, the proposed conversion price shall be RM1.20 for each new stock unit in ASB. The Conversion Price shall be satisfied by tendering RM1.00 nominal value of CLS and accumulated interest up to the date of conversion. In the event that on Maturity Date, the three (3)-month weighted average market price prior to the Maturity Date of ASB stock units is below RM1.20 per stock unit but above RM1.00 per stock unit, ASB shall compensate the Lenders through the issuance of ASB new stock units at the three (3)-month weighted average market price or the par value, whichever is the higher. If the three (3)-month weighted average market price prior to the Maturity Date is below the par value of ASB stock units, the difference between the RM1.20 per stock unit and the par value will be satisfied through the issuance of ASB new stock units at the par value of RM1.00 per stock unit, and the difference between the par value and the three (3)-month weighted average market price shall be paid in cash. |
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| 8. | Redeemability | : | Not redeemable for cash, except upon occurrence of an event of default as provided in the deed poll or repurchase of the CLS by ASB for cancellation from the CLS holders at a price equivalent to a yield of 9% per annum after taking into consideration the proceeds received by the loan stock holders from the Proposed ROS and the total interest received on the CLS as at the date of repurchase. Unless previously converted, all outstanding CLS will be mandatorily converted by the Company into new stock units of RM1.00 each in ASB on the Maturity Date. |
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| 9. | Listing | : | The CLS will not be listed on any stock exchange. Application will be made to the KLSE for the listing of and quotation for the new stock units of RM1.00 each in ASB arising from the conversion of CLS. |
Table 3: Indicative terms of the Warrants
| 1. | Form | : | The Warrants shall be issued in registered form and constituted by a Deed Poll. |
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| 2. | Tenure | : | Three (3) years. |
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| 3. | Expiry Date | : | Three (3) years from the date of issue of the Warrants. |
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| 4. | Subscription Rights | : | Each Warrant will entitle the registered holder during the Exercise Period to subscribe for one (1) new ordinary stock unit of RM1.00 each in ASB at the Exercise Price, subject to adjustments in accordance with the provisions of the Deed Poll. |
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| 5. | Proposed Exercise Price | : | Subject to the approvals of the relevant authorities and adjustments under certain circumstances in accordance with the Deed Poll, the proposed exercise price shall be RM1.00 for each new stock unit in ASB payable in full upon the exercise of each Warrant. |
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| 6. | Exercise Period | : | The Warrants may be exercised at any time from the date of issue of the Warrants up to the Expiry Date. Warrants not exercised during the Exercise Period will thereafter lapse and cease to be valid. |
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| 7. | Listing | : | Application will be made to the KLSE for the listing of and quotation for the Warrants and the new stock units of RM1.00 each in ASB arising from the exercise of Warrants. |
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| 8. | Underwriting | : | The Warrants will be fully underwritten for purposes of the Proposed ROS. |