Tanco investors approve debt settlement with Lehman Bros
May 26, 2011
Tanco Holdings Bhd’s shareholders have approved the proposed settlement scheme to restructure its debt with lender, Lehman Brothers Commercial Corp Asia Ltd.
The settlement scheme of RM144.58 million involves the payment of RM44 million cash as well as the transfer and vesting of certain properties at an agreed value of RM100.58 million.
Tanco group executive director Datuk Lynne Tan said this will place the company on a better footing as it relieves it from existing secured debts as well as substantially reduce gearing in the future.
“This will allow us to move on and start our development plans for the remaining properties we have,” she told Business Times after the company’s extraordinary general meeting (EGM) yesterday.
Tan said the cash settlement to Lehman Brothers would be paid in five installments over a 12-month period from the date of entry of the consent judgment.
“The cash settlement will be funded through internally generated funds and bank borrowings,” she said, noting that the exercise is expected to be completed by the third quarter of 2012.
Tanco is expected to record a net exceptional gain of RM118 million, which would increase earnings per share (EPS) by 35 sen arising from the waiver of the remaining secured debts pursuant to the settlement scheme.
Tanco’s property settlement comprises 495 parcels of freehold properties and one parcel of leasehold property held by certain of its subsidiaries.
Tan said the company had identified several parcels of land, measuring about 28.4 acres in aggregate, for two developments comprising of resort suites and chalets in Palm Springs Resorts City to be launched after the completion of the proposed settlement scheme.
“The development orders for the proposed developments have been obtained and are currently pending submission of building plans to the relevant authorities,” she said.
Tanco suffered a loss of RM81.7 million in fiscal 2008 before bouncing back to make a profit of RM5.1 million in 2009. – Business Times
