Transmile proposal
Cargo carrier Transmile Group Bhd (7000)plans to offer its bondholders shares or loan stocks under a debt-restructuring plan it has yet to fully present to them.
Its chief financial officer Kam Wai Peng said some haircuts will also be requested as the debt is too huge for its current operations to service.
"If the lenders continue to demand high interest rates and (stick to their) time frame, no, we won't be able to (service the loans), we will look into offering them equity, or some loan stocks ... and some haircuts," Kam told selected media at the company's headquarters in Subang, Selangor, yesterday.
This isn't the first time Transmile will be trying to offer shares in its loans repayment to bondholders. Almost three years ago, the bondholders rejected the proposal, preferring instead cash.
"Hopefully, they are more open to it now," Kam said.
Transmile's outstanding debt obligations to its lenders are RM528.9 million. Yesterday, the first of four MD-11s sold to Federal Express Corp left the company's Subang base. The sale of the aircraft will help the company pare down debt to about RM320.1 million.
It is still a substantial sum to service considering that Transmile registered an operating profit of only RM3.9 million for the third quarter of the financial year ended December 31 2010 and its shareholders' fund is in the red.
"(This year) we will complete the sale of the MD-11s and hope to get the agreement with the banks settled at least by second quarter, and then we need to focus on the business," managing director Liu Tai Shin said.
The debt-restructuring is only the tip of the iceberg however, as Kam points out that even with the debt-restructuring plan resolved, the company may not be able to comply with certain conditions attached to the regularisation plan required by Bursa Malaysia Bhd.
One of the conditions attached to the regularisation plan is that it needs to generate profits for two consecutive quarters after the plan.
Looking at Transmile's current operations and obligations, it is a difficult condition to meet as the deadline to submit a revamp plan to Bursa is on February 23.
"There are just too many variables at the moment to contend with, everything would impact something else. There is no clear cut answer, whether it is yes or no, or black or white. Certainly, the company will take every step to preserve value and create value, that's what the entire team has been here doing for the last three years," Liu said. - By Presenna Nambiar, btimes.com.my
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