KUALA LUMPUR, July 15 — China’s Tianjin Zhiyuan Group Ltd will inject RM1.8 billion into Perwaja Holdings Bhd in a move to regularise and revitalise the group’s financial profile in terms of gearing and other important balance sheet ratios.

Director and Group Executive Chairman of Kinsteel Bhd Datuk Alan Ong said the corporate exercise would begin in September and be completed by June 2016.

The group is expected to turnaround by March 2017 once the corporate exercise is completed, Ong told a press conference after the signing of a master framework agreement with Zhiyuan’s unit, Zhiyuan’s International Investment and Holding Group (Hong Kong) Co Ltd, here today.

The MFA will supersede the first and second memorandum of agreements, the lease agreement signed a few months ago, as well as, formalise the parties’ intention and understanding in relation to the proposed regularisation and revitalisation of the Perwaja Group.

Ong said Zhiyuan would own a 37 per cent stake in Perwaja initially and this would be increased to 64 per cent upon completion of the exercise while the stake of current shareholders of Perwaja Kinsteel Bhd and Maju Holding Sdn Bhd would be reduced to 25 per cent from 64 per cent now.

Among the salient points in the MFA included the proposed balance sheet restructuring to strengthen and reduce its accumulated losses; proposed special issue and rights issue with warrants to raise RM52.2 billion; debt restructuring, partial debt to equity conversion, reschedule repayments to longer tenure and exemption to undertake a mandatory take-over offer.

Perwaja is proposing a par value reduction to five sen each from RM1.00 a share which would reduce its paid up capital to RM28 million from RM560 million currently.

“The reduction would enable greater flexibility in the issuance of new shares in future, said Ong, adding that Zhiyuan would subscribe to the entire proposed rights issue, as well as, provide for a irrevocable written undertaking to subscribe its entitlement of up to RM100 million under the proposed rights.

“With the completion of the corporate exercise and the entry of Zhiyuan, we can expect to see Perwaja exiting from the list of Practice Note 17 (PN17) status companies , Ong added.

Meanwhile, Chairman/President of Zhiyuan Investment Group Zhang Zhong

said the key reason the company chose to invest in Perwaja was due to the plant’s adaptability for modification using Zhiyuan’s patented technology which could be produced at low cost.

Perwaja’s plant was also strategically located near developed infrastructure and close by to Kemaman port, a major seaport in the East Coast,” he said. — Bernama