KUALA LUMPUR (April 28): The High Court on Monday granted its approval and sanction for Pestec International Bhd’s (KL:PESTEC) proposed scheme of arrangement involving a one-off upfront cash payment of RM65 million to settle its RM267 million outstanding debt.
The order was granted by Judicial Commissioner Suhendran Sockanathan Saheran Abdullah.
Pestec, formerly known as Pestech International Bhd, was represented in court by Lee Shih and Ng Kar Man from Messrs Lim Chee Wee Partnership.
Pestec announced the court order in a bourse filing. “Pestec will make additional announcements when there are further developments,” the company said.
This debt restructuring was initiated as a pre-packaged scheme of arrangement under Section 369C of the Companies Act, making it one of the first such pre-packs since this method was introduced in April last year following amendments to the Companies Act.
The pre-packaged scheme allows for potential court approval without the need for a court-convened meeting, provided that scheme creditors representing at least 75% of the outstanding debt have already given their approval.
The scheme involves a one-time upfront cash payment of RM65 million, which will serve as the full and final settlement for the total outstanding debt of RM267 million owed to scheme creditors.
This means the scheme creditors are accepting a significant haircut of 75.7%, or RM202 million, on the outstanding debt. As of end-December last year, Pestec’s total loans and borrowings amounted to RM965.64 million, excluding RM82 million in perpetual sukuk.
The RM65 million payment to the scheme creditors will be funded through proceeds from Pestec's restricted share issuance at 12 sen per share last year to Dhaya Maju Infrastructure (Asia) Sdn Bhd, which gave Dhaya Maju a controlling 57.52% stake in the company for RM160 million.
The funds raised from this issuance were earmarked for working capital, repayment of borrowings, and operational needs.
In March this year, Pestec announced another restricted share issuance to Dhaya Maju. This round, Dhaya will receive shares representing a 9.09% stake of the company’s enlarged share base, also priced at 12 sen per share. The issuance is expected to raise RM27.81 million for Pestec to finance ongoing projects.
Pestec shares slipped one sen or 6.06% to close at 15.5 sen on Monday, giving the group a market capitalisation of RM349.86 million for the company.