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- The recapitalisation also includes a proposed asset injection involving selected property-related assets valued at up to RM50 million, to be acquired by Ireka at a "mutually agreed discounted valuation based on an independent assessment".
KUALA LUMPUR (Nov 4): Construction and property developer Ireka Corp Bhd (KL:IREKA) has roped in a China-based company in its efforts to exit its Practice Note 17 status.
In an exchange filing on Monday (Nov 3), Ireka said that it has signed a non-binding term sheet with Rongyao Investment Chengdu Co Ltd for its restructuring and recapitalisation exercise. Under the term sheet, Rongyao will inject cash, strategic assets and lead financial restructuring with Ireka’s creditors.
To recapitalise Ireka, Rongyao will underwrite a private placement of new Ireka shares equivalent to 10% of the group’s existing issued share capital at an indicative price of 30 sen per share, subject to approval and pricing requirements from Bursa Securities.
Proceeds from the placement will be channelled towards working capital and restructuring costs, Ireka said in a filing on Monday.
The recapitalisation also includes a proposed asset injection involving selected property-related assets valued at up to RM50 million, to be acquired by Ireka at a "mutually agreed discounted valuation based on an independent assessment". The consideration will be satisfied via the issuance of new Ireka shares.
Rongyao will also lead discussions and structure a debt restructuring plan for Ireka and its subsidiaries by engaging with major creditors to help stabilise the group’s balance sheet.
Pending completion of the transaction, the Chinese investor may nominate one observer to attend Ireka’s non-voting executive committee meetings. Following completion—and subject to regulatory and shareholder approvals—Rongyao will be entitled to nominate one representative to Ireka’s board of directors.
The proposed transaction remains subject to several conditions, including the extension by Bursa Securities for Ireka to submit its regularisation plan, satisfactory completion of legal, financial and commercial due diligence by Rongyao, among others.
The term sheet also grants the investor a 14-day exclusivity period from the date of signing, during which Ireka and its controlling shareholders are restricted from engaging in negotiations with other parties for similar transactions, according to the filing.
Ireka was classified as a PN17 company on March 1, 2022, after the local bourse rejected its application for an extension of the Covid-19 relief period, as the group’s shareholders’ equity fell below 50% of its issued capital.
The company’s appeal against Bursa Securities’ earlier decision to suspend and de-list its securities, as well as its application for an extension of time to submit a regularisation plan, filed on Oct 2, remain pending.
Trading in Ireka’s securities was suspended by Bursa on Oct 3.
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