TIME Engineering Bhd (TEB) may use the RM560mil windfall expected from TIME Dotcom Bhd (TDC) to pay off its debts, according to its managing director Ahmad Pardas Senin.
“We are studying various options to bring down the group’s debt level. Currently, the disposal of the group’s stakes in Renong Bhd and TDC would not be the best solution to raise cash given the weak stock market conditions,'' Pardas told re- porters after TEB’s EGM in Kuala Lumpur yesterday.
He said the group had sold some shares late last year but had stopped doing so after the market downturn, saying “current market valuations do not reflect the true value of the companies.”
The group had earlier planned to sell stakes in Renong and TDC to cover a large chunk of its RM615.7mil US-dollar dominated bond redemption.
According to information provided in the circular for the EGM, TEB expects to raise RM255mil from the sale of Renong shares and RM436mil from the TDC share sale.
It obtained shareholders’ approval at yesterday’s EGM to dispose of Wisma TIME for RM62mil to finance part of the first payment of RM169.3mil due on June 30, 2003.
While the share sale plan is now on hold, Pardas maintains that the group will meet its debt obligations.
He said TEB was expected to receive a cashflow of RM560mil from 45%-owned TDC following TDC’s proposal to pay 50 sen per share to its shareholders.
TEB owns 1.13 billion shares in TDC. The capital payment is upon the completion of the disposal of TDC’s mobile phone unit TMCellular Sdn Bhd to Maxis Communications Bhd.
Pardas, who is also TDC executive director, said he expected the disposal to be completed in the 1st half of this year.
He said TEB now had the option to use the cashflow arising from TDC’s capital repayment to pre-pay its bond obligation, which would result in interest saving of RM2mil for the group.
TEB has an outstanding bond obligation of RM615.7mil, to be paid in three tranches. The last tranche is due on June 30, 2005.
Inclusive of the bond issue, TEB’s total debts stood at RM1.4bil.
Pardas said the group’s immediate focus was to reduce its debt level but declined to reveal the gearing level at which the group would be comfortable with.
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