The SC urges PN4 companies to expedite restructuring – capitalise on flexibilities given

The Securities Commission (SC) urges financially distressed companies which fall under the Kuala Lumpur Stock Exchange (KLSE) Practice Note 4/2001 (PN4 Companies) to address their situation urgently.

In particular, the SC reminds PN4 companies which are subject to the 31 December 2002 deadline, which is only six months away, to expedite their restructuring efforts. The extended deadline of 31 December 2002, announced by the KLSE in November last year, applies to all listed companies classified under PN4 before 31 December 2001.

As such, the SC encourages PN4 companies to take advantage of the flexibilities given by the SC to facilitate the restructuring process of these companies.

The facilitative measures, effected through the SC’s Policies and Guidelines on the Issue/ Offer of Securities (Issues Guidelines), were targeted at providing more avenues for distressed listed companies to revitalise their operations.

Towards this end, the SC on 3 September 2001 granted distressed listed companies flexibilities such as less stringent historical profit requirements for the injection of assets and the reduction of the post-restructuring net tangible asset (NTA) position requirement. This was followed by further flexibilities that were announced on 8 May 2002 whereby the SC relaxed several criteria for the injection of foreign assets and multinational companies into Malaysian listed companies.

The SC, in recognition of the complexity of restructuring proposals and consistent with its open-door policy, reiterates its call for pre-submission consultations with PN4 companies.

The SC had specifically highlighted its availability for pre-submission consultations with PN4 companies during a closed-door dialogue session with PN4 companies in April this year. The dialogue provided an avenue for PN4 companies and their advisers to raise general issues of concern besides those raised in working meetings with the SC. It also enabled the SC to solicit feedback on the progress of the restructuring efforts of these companies.

The SC also reminds PN4 companies and their advisers that restructuring proposals should be comprehensive, fair to all shareholders and capable of resolving all financial problems faced, which are the SC’s prime considerations in its assessment of restructuring proposals.

Investors are advised to make informed investment decisions by tracking the status of PN4 companies and taking into consideration the higher risks involved with respect to securities of PN4 companies

10 JULY 2002