KUALA LUMPUR (Dec 18): Pestech International Bhd (KL:PESTECH), now a subsidiary of Dhaya Maju Infrastructure (Asia) Sdn Bhd, has proposed a scheme of arrangement involving a one-off upfront cash payment of RM65 million to settle its RM267 million outstanding debt.

The RM65 million payment, which would serve as the full and final settlement of all debts to its scheme creditors, will be funded through proceeds from its restricted issuance to Dhaya Maju that resulted in the latter owning a 57.52% stake in Pestech.

“The Proposed Scheme of Arrangement is initiated as a pre-packaged scheme of arrangement under section 369C of the [Companies] Act,” said Pestech.

This means the court can eventually approve the scheme without meeting the scheme creditors — although Pestech said it has already secured “approval-in-principle” from scheme creditors representing more than 75% of the RM267 million debt, Pestech said.

That said, the scheme creditors will still officially vote on the scheme of arrangement by Jan 15. The main terms of the restructuring have been conveyed to the scheme creditors, it added.

In short, the scheme creditors, which hold 28.89% of Pestech’s total borrowings (excluding perpetual sukuk), will see a haircut of 75.66% or RM202 million.

It is noted that “favourable revisions” of Pestech’s borrowings “with terms and conditions acceptable to” both Pestech and Dhaya Maju was one of the conditions of Dhaya Maju’s entry into Pestech as its largest shareholder.

Dhaya Maju has subscribed to 1.33 billion shares in Pestech for RM160 million or 12 sen apiece. The restricted issuance was approved at a general meeting on Dec 10.

The restricted issuance, approved by Pestech shareholders at the extraordinary general meeting on Dec 10, represents 135.43% of the company’s existing issued shares (excluding treasury shares).

Shares in Pestech have rebounded following the shareholders’ meeting, closing up 1.5 sen or 8.82% to 18.5 sen on Wednesday. The counter traded from as low as 11.5 sen to 14.5 sen in the last three months, before Dhaya Maju’s official entry into the company.

The emergence of Dhaya Maju as Pestech’s largest shareholder followed IJM Corp Bhd’s (KL:IJM) decision to abort its plan to acquire a 44.83% stake in Pestech for RM124 million, due to unmet conditions.

Dhaya Maju also secured an exemption from regulators, relieving it of the obligation to make a mandatory general offer for the remaining shares in Pestech.

As of end-September, Pestech had RM924.4 million in loans and borrowings plus RM82 million in perpetual sukuk, against cash of RM81.05 million. Trade receivables stood at RM161.7 million, against trade payables of RM468.5 million.

Pestech’s accumulated loss stood at RM101.81 million, against its share capital of RM232.94 million. Its market capitalisation stood at RM190.12 million.

The counter is down 43.08% this year.