KL eases rules to hasten restructuring

KL eases rules to hasten restructuring

KUALA LUMPUR (AFP): Malaysia's Securities Commission on Monday
relaxed guidelines on fund raising in a sweeping move to hasten
restructuring for troubled companies amid weak market conditions.

Rules on shareholding spread, underwriting, reserves and
capital structure for companies planning an initial public
offering (IPO) and fund raising by troubled listed firms were
eased with immediate effect, commission chairman Abdul Ali Kadir
said in a press conference.

The minimum 15 percent public shareholding level for IPO
companies was removed and institutional funds can own up to 15
percent of shares allocated to the public, up from five percent
previously.

Firms may now list any securities as part of their IPO schemes
including preference shares, options and convertible securities,
instead of just ordinary shares.

They can also place out private securities, previously allowed
only for those with paid-up capital of at least 100 million
ringgit (US$26.3 million).

Second board firms can transfer to the main board after a year
instead of three years and need not have an uninterrupted profit
record.

All listed companies now enjoy flexibility on fund raising and
restructuring, previously granted to only firms defined as
"rescue cases", such as easier profit requirements for assets to
be injected.

"There are also companies which are very sick but not in
intensive care ... they are not allowed to enjoy this medicine
so they all suffer prolonged agony," said Abdul Ali.

"We hope they do not get into intensive care so we are now
allowing this medicine to be dispensed to all those also in the
general ward."

Analysts hailed the market liberalization and said it would
shore up the economy amid the U.S. slowdown.

"Companies efforts to tap the capital markets for funds have
been delayed in the past by cumbersome rules so this will
expedite the process," said Jupiter Securities research chief
Pong Teng Siew.

Abdul Ali said the move would give companies more options in
structuring their corporate proposals.

Abdul Ali said more than 40 companies had still not made
public their debt restructuring plans following the expiry last
week of a deadline for them to regularize their financial
position.

Under new rules, the post-restructuring net tangible asset
requirement for distressed companies is cut to 33 percent of the
par value of their ordinary shares, down from at least 50 percent
previously.

He said the new rules had been benchmarked against the
practices of developed markets such as the U.S., Britain, Hong
Kong, Australia and Singapore and would not compromise the
interests of minority shareholders.