Perak Corp plans share capital reduction, RM90 mil land sales, preference shares issuance to regularise financial condition

• The share capital reduction entails the cancellation of RM185 million of its RM272.77 million share capital to offset the group’s RM177.35 million in accumulated losses as at end-September 2024, according to the group’s bourse filing on Tuesday.

KUALA LUMPUR (Feb 18): Practice Note 17 (PN17) company Perak Corp Bhd (KL:PRKCORP) has proposed a regularisation plan that consists of a capital reduction, joint development project, RM89.6 million in land sales, RM40.38 million entitlement from a joint development, and preference share issuance to settle debt owed to creditors.

The share capital reduction entails the cancellation of RM185 million of its RM272.77 million share capital to offset the group’s RM177.35 million in accumulated losses as at end-September 2024, according to the group’s bourse filing on Tuesday.

Meanwhile, Perak Corp said the group has inked a joint venture agreement with major shareholder Perak State Development Corp (PKNP) on Jan 8 to jointly develop the Silver Valley Technology Park Industrial Hub in Hulu Kinta, Perak.

On the same date, the group entered into a joint development agreement with Advancecon Development Sdn Bhd, a wholly owned subsidiary of Advancecon Holdings Bhd (KL:ADVCON) for the main infrastructure works for the Silver Valley Technology Park Industrial Hub.

The project carries a gross development cost of RM716.96 million and a gross development value of RM1.03 billion — of which Perak Corp is entitled to 35% of the net development value.

On the land sale segment of its regularisation plan, Perak Corp listed the sale of 424.7 acres of land in Bernam Timor, Perak, for RM89.6 million under agreements inked in November 2024.

This comprises 73.14 acres to Makmur Impian Property Sdn Bhd for RM21.13 million, and 351.56 acres to Tanjung Malim Hi-Tech Park Sdn Bhd for RM68.44 million.

Meanwhile, Perak Corp reiterated its RM40.38 million entitlement under a supplemental agreement with PKNP and Uni-Poh Construction Works Sdn Bhd concerning the development of a 56.3-acre land known as the Teluk Dalam land.

As per a court-approved scheme of arrangement, Perak Corp plans to undertake the issuance of up to 39.73 million redeemable preference shares series B (RPS-B) at RM1 apiece to settle debt owed to unsecured scheme creditors.

The RPS-B shall carry a five-year tenure with a preferential dividend rate of 2% per annum and are non-convertible to ordinary shares. The company has the option to redeem the RPS-B at any time during its tenure.

Upon issuance of the RPS-B, any balance debts not settled to the scheme creditors will be fully waived. Against Perak Corp’s total RM379.34 million in verified debt, the scheme comprises creditors taking a RM357.6 million haircut.

Perak Corp issued two other series of preference shares — 20.9 million RPS-A1 and 14.91 million RPS-A2, both at RM1 apiece — back in January 2022 to CIMB Bank Bhd and Affin Islamic Bank Bhd as part of settlement agreements. 

The RM129.95 million proceeds from the settlement entitlement and land sales will be used for the redemption of the RPS, fund construction work of a sewerage treatment plant for Bandar Meru Raya lands, and the group's general working capital.

“The proposed regularisation plan serves to regularise the financial condition of Perak Corp in order to address and uplift the affected listed issuer status of the company.

“Through the proposed regularisation plan, the group would be able to strengthen the group’s cash flow position via the land disposals and settlement, which would in turn augur well for the group’s ongoing plan to revitalise its business operations,” Perak Corp said.

“The board believes that the anticipated enhanced financial position of the group following the implementation of the proposed regularisation plan is expected to improve the financial performance and condition of the group and eventually lead to the regularisation of Perak Corp’s PN17 status,” it added.

Shares in Perak Corp ended unchanged at 36.5 sen, valuing the company at RM36.5 million.

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