KUALA LUMPUR (Nov 27): Debt-laden offshore service vessel operator Marine & General Bhd (M&G) has proposed a debt-to-equity scheme that entails the issue of 1.5 billion new shares to restructure RM200 million of the total of RM923.2 million debts owed by its subsidiaries.
In a filing with Bursa Malaysia today, M&G said its 70%-owned unit Jasa Merin (Malaysia) Sdn Bhd (JMM), and two other units, namely JM Global 3 (Labuan) PLC (JMG 3) and JM Global 4 (Labuan) PLC (JMG 4), have entered into five separate agreements with three banks to restructure the outstanding facilities by JMM and its subsidiaries.
JMM has entered into three separate agreements with Affin Bank Bhd, Maybank Islamic Bank Bhd and Bank Pembangunan Malaysia Bhd (BPMB). Meanwhile, JMG 3 and JMG 4 have signed facility agreements with BPMB.
Under the proposed debt restructuring scheme, JMM will issue 150 million irredeemable preference shares (IPS) of RM1 each to the banks. The IPS are convertible into new shares in M&G.
In conjunction with the conversion of IPS, M&G has proposed to issue 1.5 billion new shares at an issue price of 10 sen per share amounting to RM150 million.
This means that one JMM convertible share may be exchanged for 10 new M&G shares worth RM1.
Any remaining IPS held shall be exchanged into new M&G shares automatically at the conversion price of 10 sen per M&G share on the 10th anniversary of the issue date.
In addition, JMM and its subsidiaries are required to make an upfront cash payment of RM50 million to the banks.
Upon the completion of the upfront payment coupled with the proposed issuance of IPS, the RM200 million debts owed by JMM and its two units shall be fully and irrevocably settled, satisfied, released, discharged and cancelled.
This will grant to JMM and its other two units additional time to settle the balance outstanding amounts of RM723.2 million by way of term financing, said M&G.
Furthermore, M&G will subscribe up to RM150 million new cumulative non-convertible redeemable preference shares in JMM as settlement of RM94.4 million that JMM owed to its parent company. The remaining RM55.58 million cash will be utilised for JMM’s working capital.
Upon the completion of the proposed exercises, M&G’s enlarged issued share capital would expand to 2.22 billion shares. As at the latest practicable date, M&G’s share capital stood at 723.88 million shares.
M&G said the proposals are also expected to have a positive impact on the group’s future earnings. The group’s earnings per share (EPS), however, will be correspondingly diluted.
On Feb 6 this year, Bank Negara Malaysia (BNM) has agreed to mediate between M&G and its financiers. JMM, then, had received approval from BNM’s corporate debt restructuring committee (CDRC).
Shares of M&G closed unchanged at 6.5 sen today, valuing the company at RM47.05 million.