The recent restructuring scheme is expected to bear fruit as the new company would have a steady flow of income from PSC Asset Holdings' 21-storey, Menara PSCI in Penang.
BACK in Sept 1996, with a share price of RM12.70, Actacorp Holdings Bhd had a yearly group revenue of RM300 million and massive plans to venture abroad.
With an order book of around RM800 million, the company was still looking for ventures overseas and locally: property development projects in places such as Ghana, Indonesia, South Africa, Albania and Myanmar, and timber concessions in Kelantan and Pahang.
Executive chairman Tan Sri Amin Shah Omar Shah was the darling of the investment community, hogging the limelight with Business Focus Sdn Bhd's (the holding company) corporate manoeuvres.
Then, by the end of 1998, Actacorp's share price tumbled to below RM2. It was last traded at RM1.68 on 23 October 2000.
For the financial year ended Jun 30 1998, the company posted a net loss of RM17.72 million in contrast to a profit of RM10.8 million the previous year, marking the decline.
Winding up of subsidiaries
With the exception of a RM18 million profit on the back of a RM4.8 million turnover registered in the company's financial year ended June 30 last year, which was largely attributable to the winding up of certain subsidiaries, the company has been consistently in the red with its shares suspended since Oct 2000. It is classified as a PN4 company.
And the suspended Kuala Lumpur Stock Exchange main board company, like many others who faced the risk of being delisted if the year end deadline by the KLSE is not met, revealed a debt revamp plan just days before the close of the year, while requesting that the deadline for it to regularise its financial condition be extended to end 2003.
Under the plan, PSC Industries Bhd will inject its property investment wing, PSC Asset Holdings Sdn Bhd, into a new company, which will take over Actacorp's listing status.
The proposal is meant to “restructure, regularise and revitalise” Actacorp via a NewCo with an injection of an investment property to provide the NewCo group with a steady income stream.
Both Actacorp and PSC Industries are affiliated to Amin.
Amin has a 23.96 per cent stake in Actocorp, while Business Focus holds another 23.96 per cent.
The restructuring plans came after the financially distressed Actacorp was classified as a PN4 company at end February last year, due to the challenging economic climate and the stiff competitiveness in the construction sector.
Actacorp became technically insolvent and was unable to repay its creditors following the accumulated losses which exceeded its issued share capital and reserves, resulting in the capital deficit of RM200.45 million based on its audited accounts for financial year ended June 2002.
The recent restructuring scheme is aimed at the NewCo getting a steady flow of income from PSC Asset Holdings' 21-storey, Menara PSCI in Jalan Sultan Ahmad Shah in Penang, which is valued at RM70 million. Actacorp will acquire PSC Asset Holdings for RM22 million.
Issue of new shares
The new company will issue 22 million new 50 sen shares and 22 million irredeemable convertible preference shares (ICPS) at an issue price of 50 sen per ICPS to PSC Industries as consideration for PSC Asset Holdings.
The new company will also issue an additional 48 million new shares plus 48 million new ICPS to PSC Industries and to persons nominated by PSC Industries, as PSC Industries will either assume, refinance or settle PSC Asset Holdings' debt of RM41.50 million. The disposal of PSC Asset Holdings to Actacorp will see PSC Industries emerge as the controlling shareholder of Actacorp Holdings.
Cash rich entity
PSC Industries is a cash rich entity with around RM716 million in cash and short-term loans amounting to RM376.7 million. The company, which is into property development, has assets valued at almost RM2.8 billion.
Other than the incorporation of the new company controlled by PSC Industries taking over the listing status of Actacorp, the other salient features of the restructuring include share exchange, a warrant exchange, a rights issue, a special issue and a debt settlement.
Actacorp, however, requires the approval of shareholders and regulatory bodies including the Securities Commission, the Foreign Exchange Committee and the Ministry of International Trade and Industry before the restructuring can be carried out.
Actacorp has also been discussing the restructuring scheme with several of the company's creditors. Actacorp has total debts amounting to RM122.35 million and assets valued at RM47.26 million.
The company, with subsidiaries Noble Concepts Sdn Bhd, V-Pile Systems Sdn Bhd and Teknik Cekap Sdn Bhd, also faces winding-up petitions.
On a different note, Actacorp in October last year sold off its entire stake in Intrasia Sdn Bhd, an agricultural chemical producer to Integrated Maker Sdn Bhd for RM360,000.
Amin has made it clear that Actacorp will remain in its core business of construction and property even after the restructuring, which he predicts will be completed by the end of this year.
Increase land bank
Amin has also mentioned during press conferences that the company will be looking at increasing its land bank to strengthen its core business. The company, he has said, is on the look out for small property and construction concerns, which it can finance through internal funds, as banks are unwilling to assist the company due to the weak financial situation and the PN4 classification.
Amin has also noted that he does not expect the company to return to the black this financial year ending June 30, 2003.
Actacorp succumbed to a net loss of RM2.70 million on the back of a RM586,000 turnover for the company's third financial quarter ended Sept 30, 2002, improving, however, from a net loss position of RM8.72 million from a RM3.30 million turnover for the corresponding period the last financial year.
PSC Industries, on the other hand, has been performing reasonably well with steady increases in profits. For the company's third financial quarter ended Sept 30 last year, PSC Industries raked in a net profit of RM24.5 million on the back of a RM280.13 million turnover, increasing strongly from a net profit of RM9.13 million from a turnover of RM234.42 million registered in the corresponding period the preceding year.