LOSS-MAKING Pernas International Holdings Bhd (PIHB) now expects to complete its massive debt-restructuring scheme in the third quarter rather than the middle of this year, as originally targeted. The exercise would slash the group's borrowings to RM1.8bil from RM2.4bil.
PIHB chief executive officer Mohd Redza Shah Abdul Wahid said the debt restructuring was taking longer than expected because many approvals, including those from the authorities, were needed for its implementation.
“This (the delay) is something that's quite normal,'' he told the media after the company's EGM in Kuala Lumpur yesterday.
Nonetheless, he described the progress of the debt restructuring as satisfactory.
At the EGM, PIHB shareholders approved the proposed restructuring that would see the redeemable cumulative convertible preference shares (RCCP) issued by Arena Target Sdn Bhd (ATSB) to Khazanah Nasional Bhd converted into a 27.5% equity interest in ATSB.
The plan would also involve reorganising the group's hotel assets by putting them under ATSB, which would end up owning Pernas Hotel Management Sdn Bhd and 10 hotels.
“This is the first stage of our restructuring scheme and the most significant; it will reduce our debts by RM630mil in one swipe,'' said Redza Shah.
He also said the group would continue looking for other avenues to further reduce its borrowings and enhance cash flow.
For instance, the group has proposed a land injection plan under which it would acquire the entire interest in Ambang Budi Sdn Bhd (ABSB), a company related to major shareholder Restu Jernih Sdn Bhd. ABSB owns 953 acres of land in Mukim Senai-Kulai, Johor Baru.
PIHB has also entered into two joint venture agreements to develop 600ha of land, including that owned by ABSB, in Johor.
Redza Shah said the land development joint ventures would help to enhance the group's cash flow.
According to the group's filings with MSEB, the two joint ventures would help generate an aggregate of RM450mil between December 2003 and 2008.
Redza Shah said the land injection plan was expected to be completed by the end of June.
As for the group's financial performance, Redza Shah expected it to break even in the current financial year ending Dec 31 and to return to profit in the next financial year after incurring losses the past six years.
The savings in interest expenses after the debt restructuring and strong crude palm oil prices would help boost group profitability, he said.
The group has forecast revenue growth of 6% to 10% this year.
Manufacturing, mainly sugar refining, is expected to remain the core income generator, contributing 42% of earnings, followed by plantations (25%) and hotel operation (22%).
For its last financial year, PIHB's pre-tax loss had narrowed to RM26.2mil from RM155.7mil a year earlier on higher revenue of RM1.15bil.
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