Photo of Proton showroom in Shah Alam for the story of Proton buy over by Geeely.... Sam Tham/Star Publication
KUALA LUMPUR: DRB-Hicom Bhd
and the Government have entered into an asset exchange agreement that varied earlier-proposed terms, giving the company more flexibility in managing a pool of assets to be pledged as collateral to the Government.
The creation of the first charge of certain identified assets - which may include landed properties, designated shares and/or cash - is to provide collateral for the Government’s remaining holding of RM1.2bil preference shares issued by its subsidiary Proton Holdings Bhd.
This is in case Proton fails to redeem the RM1.2bil redeemable convertible cumulative preference shares (RCCPS) held by Govco Holdings Bhd, which is 99.9% owned by Minister of Finance Inc.
In a filing with Bursa Malaysia, DRB-Hicom said it had inked an asset exchange agreement with Govco on Thursday, in addition to a definitive agreement to buy the first tranche of RM300mil RCCPS (with redemption date of June 6, 2023).
Under the asset exchange deal, it will be allowed to replace individual assets from the pool with other landed properties, designated shares and/or cash as well as to withdraw individual assets, as long as the asset pool’s market value is at least equal to the combined redemption value of the principal tranches of RCCPS held by Govco.
In its June 22 announcement to Bursa, DRB-Hicom said it had reached an agreement in principle with the Finance Ministry whereby, in the event of Proton’s non-redemption of Govco’s holding of RCCPS, Govco could direct DRB-Hicom to liquidate the identified assets and to pay it the proceeds of the liquidation plus any shortfall against the face value of the unredeemed RCCPS.
This requirement has been replaced. Instead, DRB-Hicom must inject more assets into the asset pool if the forced sale value of the asset pool is lower than the total redemption value of the principal tranches of RCCPS held by Govco as at Nov 30, 2030.
The asset pool’s market value should be 1.25 times that of the total redemption value of the Govco-held RCCPS.
Under the agreement, DRB-Hicom will allow Govco to register private caveats on all the landed properties in the asset pool and will further ensure that there will be no encumbrance in transferring the asset pool to Govco in the event of an asset exchange.
Based on DRB-Hicom's previous announcement,the creation of the asset pool will be completed in the first calendar quarter of 2018.
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