DEFAULT IN INTEREST PAYMENT BY PROJEK USAHASAMA TRANSIT RINGAN AUTOMATIK SDN BHD ("PUTRA"), A WHOLLY-OWNED SUBSIDIARY OF RENONG BERHAD ("RENONG")
Renong wishes to announce that PUTRA had defaulted on its interest servicing obligation amounting to RM44,589,020.33 in respect of its RM2.0 Billion Commercial Financing Facilities (the "Loan") from a number of financial institutions. The Loan is comprised of two tranches which are the RM1.0 Billion Conventional Tranche and the RM1.0 Billion Islamic Tranche which are secured by a charge over and assignment of all project accounts and assets. The default arose principally because actual revenues received are significantly below than budgeted.
EGAL AND FINANCIAL IMPLICATION
Non payment of interest constitutes an event of default for both tranches whereupon PUTRA will be required to repay the facilities in full and the security would be enforceable. The Security Agent as the debenture holder may also appoint a receiver or a receiver and manager of the charged assets.
The above default would also amount to an event of default under two other loan facilities granted to PUTRA for the aggregate principal sum of RM1.5 Billion and RM771 Million respectively. A total of RM423 Million has thus far been drawndown under the RM771 Million loan facility. The security for the RM1.5 Billion facility is the same as the Loan described above, whereas the Lender under the RM771 Million loan facility has a second charge over PUTRA's assets and the ability of the lender to commence proceedings are restricted accordingly.
MEASURES TAKEN BY PUTRA
PUTRA is currently seeking the Lenders'/Financiers' approval for indulgence to grant a moratorium period on the interest/profit payments up to 30 June 2000 inclusive of the interest/profit payments which was due on 30 September 1999; and to waive the penalty margin of 1% p.a. (where applicable) for the period from 30 September 1999 to 30 June 2000 on all interest/profit payments outstanding. The request for approval was supported by a letter from Corporate Debt Restructuring Committee ("CDRC") outlining the efforts being taken to address the short-term financial predicament and long term plan to reorganise the public transport system in Kuala Lumpur. The Lenders/Financiers are requested to revert with their decision latest by 25 November 1999 as requested by our Facility/Security Agent.
Meanwhile, PUTRA is working closely with the CDRC in CDRC's efforts to identify the most viable options for restructuring of its debt and the restructuring of the public transport system as a whole. The CDRC is looking extensively into the public transport system sector to identify and quantify the macro and micro challenges, to create long-term solutions and to ensure these can be implemented.
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