KL INFRASTRUCTURE GROUP BERHAD
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
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.
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:-
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.
On 25 April 2007, KLMS wrote to BPMB to seek its implicit cooperation to grant a moratorium on the interest repayments premised on the understanding reached with the Government on the proposed takeover of assets and assumption of loan liabilities of KL Monorail by Syarikat Prasarana Negara Berhad.
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:-
(i) Actual fare revenues did not meet projections largely attributable to non implementation of traffic restraining measures assumed in the financial model.
(ii) The government has disallowed our requests for fare increases since 2005 even though these were in accordance with the Concession Agreement. Additionally, it has rejected our valid claims for fare compensation.
3. Measures taken to address the default in payment
KLMS has been in discussions with the Government and Bank Pembangunan Malaysia Berhad on the proposed takeover of operational assets and assumption of loan liabilities of KL Monorail by Syarikat Prasarana Negara Berhad ("SPNB").
In this regard, SPNB has conducted a due diligence audit from 5 March 2007 to 27 April 2007 on KL Monorail.
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:
(a) suspend further drawdown on or utilization of the Loan for such period as BPMB may decide; or
(b) by written notice to the Borrower, declare that its commitment to make available the Loan is cancelled whereupon the same shall be cancelled and all moneys (whether principal, interest, fee, commission or otherwise) for the time being owing under the Loan and this agreement shall become due and immediately repayable on demand and BPMB shall forthwith become entitled to recover the same with interest thereon at the Default Rate on daily rests and to exercise the rights and powers upon default,
and BPMB shall be entitled forthwith to institute such proceedings and take such steps as it may think fit to enforce payment of all amounts due and payable pursuant to the Security Documents without further notice to the Borrower.
Accordingly under Clause 13.3 [Demand for Repayment] a demand for repayment of the principal moneys interest and all other sums or moneys due under the provisions of Clause 13.2 may be made by a notice in writing from BPMB demanding payment of the same within 7 days from the date of such notice.
In addition, a cross default will also be triggered in accordance with the GSL Agreement under Clause 13.01 (e) wherein if any indebtedness of KLMS under the BPMB Agreement shall by reason of a default in the payment or performance of KLMS’s obligations thereunder becoming due prior to its stated maturity or any security for any such indebtedness becomes enforceable and such default is not remedied within seven (7) days.
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.
, Bursa Malaysia Berhad. All Rights Reserved.