PETALING JAYA: Oil and gas services firm Daya Materials Bhd will see the entrance of a new major shareholder or white knight, who will hold some 20% of the company, should its debt restructuring plan go through.
The new major shareholder is Perfect Propel Sdn Bhd, (PPSB) which will be issued new Daya Material shares at 2.5 sen, and subsequently also participate in the company’s rights issue exercise.
Daya Materials closed yesterday unchanged at 1 sen on volume of 20.75 million shares. Fifty two weeks ago, Daya was trading at 9 sen.
For now, PublicInvest Research remains cautiously optimistic on Daya Material’s debt restructuring exercise.
However, the research house has reserved comments on the group’s turnaround efforts, pending details of the full restructuring plan.
Last Friday, Daya Materials announced a debt restructuring exercise which involves a proposed capital reduction exercise and a proposed rights issue of new shares with free detachable warrants, among others.
This is incidentally a precursor to the group’s PN17 regularisation plan.
Under this present RM32.46mil deal, 534 million new shares will be issued at 2.5 sen per share to PPSB in place of RM13.35mil in debt assumed, RM18.69mil will be set-off against subscriptions from the proposed rights issue, while RM420,000 will be satisfied in cash.
PPSB is a 49%-shareholder of Daya CMT, which is in turn a 51%-owned entity of Daya Materials.
“With RM246.12mil in total borrowings as at Sept 30, 2018, and in particular RM83.1mil in redeemable convertible unsecured bonds already due, one can expect a significant ballooning of its share base when the full regularisation plan is announced.
“The one significant encouragement remains that the company is profitable operationally,” said PublicInvest Research.
The research house is maintaining a “neutral” call on Daya Materials.
The first part of the debt restructuring exercise is related to the now-terminated RM270mil contract awarded by Yuk Tung Construction to Daya CMT.
Following the termination of the contract, a principal sum of RM40mil is to be paid to Daya CMT, presumably for advances in lieu of works undertaken.
A subsequent mutual settlement agreement signed in December 2016 saw Daya Materials agreeing to assume RM24mil of the RM40mil owed by the third party to Daya CMT, with the former now directly indebted to the group.
Meanwhile, the second part of the debt restructuring exercise is a result of an RM18.6mil loan undertaken from PPSB in mid-2015 with an interest rate of 8.85% per annum to part-finance the acquisition of an offshore subsea construction vessel known as Sime Daya 1.
Inclusive of interest, the total sum owed is now RM20.7mil.
Lastly, the third part of the debt restructuring exercise will see Daya CMT proposing to declare dividends amounting to RM24mil, which shall cover the first part of the debt restructuring exercise.
From this sum, RM12.24mil will be payable to the group and RM11.76mil will be payable to PPSB in proportion of their respective shareholdings in Daya CMT.
Daya Materials will then assume the RM11.76mil owed to PPSB, thereby increasing total amount owed to RM32.46mil.