General Announcement
Reference No CS-070430-B248F

Company Name
:
KL INFRASTRUCTURE GROUP BERHAD  
Stock Name
:
KLINFRA  
Date Announced
:
30/04/2007  


Type:Announcement
Subject:KL INFRASTRUCTURE GROUP BERHAD ("KLINFRA" or “the Company")
-Default in Payment Pursuant to Practice Note No. 1/2001 of the Listing Requirements of Bursa Malaysia Securities Berhad

Contents :

We act for and on behalf of KLINFRA.

Pursuant to Practice Note No. 1/2001 ("PN1/2001") of the Listing Requirements of Bursa Malaysia Securities Berhad ("Bursa Securities"), the Board of Directors of KLINFRA wishes to announce that its wholly-owned subsidiary i.e. KL Monorail System Sdn Bhd ("KLMS") has defaulted in its interest repayment to its lender i.e. Bank Pembangunan Malaysia Berhad.

1. Introduction

KLMS has on 25 May 1999 entered into a non recourse Support Loan Agreement with the Government of Malaysia for the provision of a RM300 million support loan to part finance the implementation of the KL Monorail ("GSL Agreement").

On 31 May 2001, KLMS entered into a non recourse Loan Agreement with Bank Pembangunan Malaysia Berhad ("BPMB") (formerly known as Bank Pembangunan Dan Infrastruktur Malaysia Berhad) for the provision of a RM620 million infrastructure loan to part finance the implementation of the KL Monorail ("BPMB Agreement").

In relation to the security arrangements, a Security Sharing Agreement was entered into on 23 August 2001 between the Government of Malaysia, the Security Trustee, KLMS and BPMB to essentially provide for security sharing on a parri-passu basis between the Government of Malaysia and BPMB.

Subsequently on 29 December 2005 the BPMB Loan was restructured to provide for interest repayment on a semi-annual basis as follows:-

Estimated Amount
Repayment Date (RM’million)___

29 June 2006 4.07
29 December 2006 4.24
29 June 2007 4.37

Any remaining interest shall be capitalized up to 29 June 2007.

BPMB has granted to KLMS extensions of time until 29 April 2007 for the 29 December 2006 instalment in view of continuing discussions on loan restructuring and the potential takeover of KL Monorail by the Government.

Following an approval in principle on 22 December 2006 and a follow up meeting on 6 February 2007 with the Government on the takeover of operational assets and assumption of loan liabilities of KL Monorail, a due diligence audit was conducted from 5 March 2007 to 27 April 2007 by an extensive team of consultants appointed by the Government.

However, surprisingly on 26 March 2007 we were notified by BPMB that BPMB will not entertain any further extensions of time for interest repayment. Hence, KLMS on 29 March 2007 informed the Government on the receipt of the unexpected letter from BPMB and sought reassurances on the approval in principle of the takeover and the appropriate course of action needed. No response was received from the Government.

BPMB in turn on 27 April 2007, notified KLMS that it will not grant any moratorium on interest repayments, contrary to our implicit understanding.

2. Reasons for the default in payment

KLMS was unable to meet an interest repayment sum of RM4,244,801.91 due on 29 April 2007 due to the following reasons:-
3. Measures taken to address the default in payment
4. Financial and legal implications in respect of the default in payment

Pursuant to clause 13.2 of the BPMB Agreement [Occurrence of an Event of Default or Potential Event of Default] at anytime after the occurrence of an Event of Default or a Potential Event of Default, BPMB may at its absolute discretion (but shall not be under any obligation) to:
The Board of Directors of KLINFRA further wishes to inform the following:-

(a) KLMS is a major subsidiary of KLINFRA.

(b) The BPMB Loan to KLMS has no recourse to KLINFRA as KLINFRA has not provided any guarantee or security in respect thereof.

(c) The Board of Directors of KLINFRA is of the opinion that in the event the proposed acquisition of assets and assumption of loan liabilities of KL Monorail by SPNB proceeds to completion within the next six (6) to nine (9) months, KLINFRA will accordingly undertakes to provide Bursa Securities the Solvency Declaration duly executed by the Board of Directors of the Company.

This announcement is dated 30 April 2007.




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