APPOINTMENT OF LIQUIDATORS FOR PROJEK USAHASAMA TRANSIT RINGAN AUTOMATIK SDN BHD ("PUTRA"), A WHOLLY-OWNED SUBSIDIARY OF RENONG BERHAD ("RENONG")
1.1 We refer to our announcement dated 21 March 2002 in relation to the receipt by PUTRA of two (2) winding-up petitions ("Petitions") under section 218 (1)(e) of the Companies Act, 1965 filed by Commerce International Merchant Bankers Berhad ("the Petitioner"), being the Facility Agent of PUTRA’s RM2.0 billion Commercial Financing Facilities.
1.2 PUTRA’s assets and operations are currently in the process of being taken over by the Government of Malaysia pursuant to the Concession Agreement between PUTRA and the Government dated 7 August 1995 ("CA").
1.3 On 26 April 2002, the Kuala Lumpur High Court had made an order for the winding up of PUTRA. On the same date, the Kuala Lumpur High Court appointed the Petitioner’s nominees, namely Mr. Gan Ah Tee, Mr. Ooi Woon Chee and Encik Mohamed Raslan Bin Abdul Rahman, as joint and/or several liquidators of PUTRA ("Liquidators"). Details of the events leading to the appointment of the Liquidators are set out in Section 3.0 hereunder.
1.4 We wish to inform the Exchange that, save and except for PUTRA, details of which are set out below, none of Renong’s other subsidiaries or major associated companies is currently under receivership.
2.0 Information On PUTRA
2.1 PUTRA was incorporated in Malaysia on 15 February 1994. The present paid up capital of PUTRA is RM300,000,000 comprising 300,000,000 ordinary shares of RM1.00 each.
The principal activities of PUTRA are to design, construct, finance, operate and maintain the Light Rail Transit System 2 ("LRT") and ancillary activities comprising principally station development along the corridor of the LRT.
2.2 As stated in paragraph 1.2 above, PUTRA entered into the CA on 7 August 1995. Under the terms of the CA, PUTRA is responsible to design, construct, finance, operate and maintain the LRT in consideration for which PUTRA is entitled at its own cost, expense and risk to collect fares from the LRT and undertake ancillary activities comprising principally station development along the corridor of the LRT. The concession period is for 60 years.
2.3 PUTRA had successfully met the targeted deadline to complete the first phase of the LRT system in September 1998, in time for the Kuala Lumpur Commonwealth Games. The second phase was successfully completed in June 1999. The PUTRA LRT system is the longest fully automatic driverless system in the world. Since its commissioning, the PUTRA LRT system has operated smoothly. It has benefited the city and the nation and is now an important element of the Kuala Lumpur transportation system.
2.4 However, the economic situation of the country has resulted in certain assumptions made by PUTRA during the planning stage not materialising. This included the lower ridership which had necessitated PUTRA to lower its fare level, and consequently reduced PUTRA’s revenue. As a result, PUTRA is not able to service its debts obligations.
2.5 The Government, through Syarikat Prasarana Negara Berhad ("SPNB"), a wholly-owned subsidiary of the Ministry of Finance ("MOF") had, on 26 November 2001, acquired the future rights, benefits and entitlements under the facility agreements for the RM2.0 billion Commercial Financing Facilities from PUTRA’s commercial lenders. Further details subsequent to this are set out in section 3.0 below.
3.0 Details Of The Events Leading To The Appointment of the Liquidators
3.1 As mentioned in Para 2.4 above, PUTRA is not able to service its debts and is therefore supportive of the Government’s decision to take over the assets and operations of PUTRA. The events leading to the liquidation and appointment of liquidators of PUTRA are as follows:
(i) On 26 November 2001, PUTRA’s commercial lenders assigned all the present and future rights, benefits and entitlements under the facility agreements for the RM2.0 billion Commercial Financing Facilities to SPNB.
(ii) On 10 December 2001, the Facility Agent for SPNB had, via its solicitors’ letters dated 8 December 2001, declared the occurrence of an event of default under the said facilities. The Facility Agent had also demanded payment of all outstanding amounts within fourteen (14) days from the date of receipt of the letters.
(iii) On 24 December 2001, PUTRA informed the Facility Agent of its inability to settle the outstanding amounts. PUTRA had also informed the Government of the situation and requested the Government to appoint a qualifying substitute or itself purchase the assets of the railway in accordance with the terms of the CA.
(iv) Subsequently on 27 December 2001, the Facility Agent via its solicitors’ letters dated 26 December 2001 served PUTRA with a statutory notice of demand pursuant to Section 218 of the Companies Act, 1965. PUTRA was given twenty one (21) days from 27 December 2001 to settle the demanded amounts, failing which, winding-up proceedings would be taken against PUTRA.
(v) On 17 January 2002, in response to the statutory notice of demand, PUTRA had again notified the Government of the receipt by PUTRA of the same and its inability to pay the demanded amount and requested the Government to appoint a qualifying substitute or itself purchase the assets of the railway in accordance with the terms of the CA.
(vi) On 20 March 2002, the solicitors of the Facility Agent served PUTRA with the winding up petitions under section 218 (1)(e) of the Companies Act, 1965.
(vii) On 3 April 2002, the MOF issued a press statement stating that its wholly-owned subsidiary, SPNB, would be taking over the entire assets and operations of PUTRA and expects that the takeover exercise be completed by June 2002.
(viii) On 26 April 2002, the Kuala Lumpur High Court made an order for winding up PUTRA and appointed the Petitioner’s nominees, namely Mr. Gan Ah Tee, Mr. Ooi Woon Chee and Encik Mohamed Raslan Bin Abdul Rahman as joint and/or several liquidators of PUTRA.
4.0 The Steps Taken Or Proposed To Be Taken By Renong In Respect Of The Appointment Of Liquidators.
4.1 The takeover process of PUTRA via the liquidation route is a process mutually agreed by Renong, PUTRA and the Government. The takeover process is in accordance with the terms of the CA.
Accordingly, Renong and PUTRA will continue to provide full support and will cooperate with the Liquidators for the successful completion of the takeover process.
5.0 Financial And Operational Impact Of The Aforesaid Appointment On The Group.
5.1 Financial Impact
5.1.1 PUTRA’s inability to service debts and subsequently the takeover by the Government had earlier been anticipated by Renong. Accordingly, Renong had accounted its investment in PUTRA on a break-up basis and had written down its investment in PUTRA from RM1,609 billion in PUTRA to the estimated net residual realisable value of RM577 million. This RM577 million is based on, amongst others, PUTRA’s estimated project costs and liabilities as at 30 June 2002 on the assumption that the takeover process will be completed by that date.
5.1.2 Whilst the final net realisable value remains subject to the outcome of negotiations with the Government, we nevertheless do not envisage any material variation thereon.
5.2 Operational Impact
5.2.1 Discussions are currently underway between the Government, SPNB, Renong and PUTRA with the objectives of facilitating a smooth takeover of the LRT operations. Renong and PUTRA will continue to provide full support to the Government, SPNB and the Liquidators to ensure a smooth takeover process to avoid any disruption to the LRT services and without causing any inconvenience to the public.
cc. Securities Commission
, Bursa Malaysia Berhad. All Rights Reserved.