Source: The Star Online
YKGI Holdings Bhd is to settle outstanding debt of US$8mil (RM32.74mil) due to its major shareholder Marubeni-Itochu Steel Inc (MISI) by April 2020.
MISI, which has a 26.6% stake in YKGI, is equally owned by Japan’s Marubeni Corp and Itochu Corp, both are listed on the Tokyo Stock Exchange.
MISI was previously a long-time technical adviser and raw material supplier to YKGI, a flat steel product maker before it sold its loss-making coated coil business and assets in Selangor to NS BlueScope (Malaysia) Sdn Bhd for RM125mil cash last year.
After exiting the coated coil business in the peninsula, YGKI focuses on its profitable downstream business in the manufacture and sales of metal roofing as well as trading of building materials in Sabah and Sarawak.
Under a repayment agreement inked on Jan 30,2020, YKGI will repay MISI in four tranches – US$360,000 each by Jan 31, Feb 29 and March 31 as well as US$6.924mil by April 30.
YKGI had settled US$2.76mil owing to MISI in the second half of 2019.
The money to repay MISI would come from the proceeds from the collection of its trade receivables from third party and its subsidiary companies (RM11.39mil), RM5mil retention fund to be released by NS BlueScope, sales of inventories (RM9.32mil) and idle machinery assets (RM4.95mil), refund from property gain tax from Inland Revenue Board (RM1.09mil) as well as advances from subsidiaries (RM5.5mil), YKGI said in a filing with Bursa Malaysia.
YKGI said its ability to fully settle the debts with MISI would depend on the timing of the receipts of the proceeds.
The estimated proceeds to be obtained by the company in the financial year ending Dec 31,2020 is about RM37.26mil, thereby enabling full settlement with MISI, said YKGI.
“If the company fails to pay any of the amount owing by YKGI to MISI which is due and payable in accordance with the repayment schedule, MISI shall have the right, at its absolute discretion, to declare such event as an event of default and terminate the repayment agreement.
“Under such event, the outstanding amount owing by YKGI to MISI will be due and payable immediately, ” it added.
However, if MISI does not declare an event of default, YKGI shall execute the “share charge” on or before April 30 or such other date as may be acceptable to the former.
The share charge involves YKGI charging 49% of the total issued share capital in wholly-owned subsidiary company Asteel Resources Sdn Bhd in favour of MISI as security for the debt repayment.
“The powers conferred by the share charge shall be exercised by MISI only after Dec 31,2020, ” said YKGI.