KUALA LUMPUR (April 20): Practice Note 17 company Daya Materials Bhd said it is in "discussions with many parties, including Siem Offshore Rederi AS", to formulate a plan to regularise its financial condition.

"As at the date of this announcement, the company has not entered into any agreement with any party in relation to the regularisation plan," said Daya Materials in a filing to Bursa Malaysia today.

The statement was issued in response to a local daily's news report that Siem Offshore Rederi would emerge as Daya Material's largest shareholder with more than 20% stake if the latter can undertake the successful implementation of a regularisation plan.

On Feb 28, Daya Materials announced it had triggered the Practice Note 17 affected issuers criteria after its shareholder equity retreated to under 25% of its issued capital as at Dec 31, 2017. Hence, Daya Materials will need to submit a plan to Bursa Securities for approval over the next 12 months to regularise its condition.

According to the daily's report, Siem Offshore had decided to record an additional impairment of US$19 million against its receivables from Daya Materials in its company's annual accounts for 2017 due to Daya Materials' financial uncertainty.

Siem Offshore said its subsidiary had outstanding receivables due from Daya Materials totalling about US$29.5 million, consisting of a convertible bond of RM83.1 million related to the outstanding seller's credit from the sale of the OCSV Siem Daya 1, approximately US$6.6 million related to outstanding charter hire and RM6.3 million of accrued interest.

Under one of the proposed steps in the regularisation plan, Siem Offshore will get about US$4 million as partial payment of its receivables, retain a small convertible bond, and convert the remainder into new shares in Daya Materials at various conversion rates.

"Following the implementation of the plan, the company will be the largest shareholder of Daya with a shareholding in excess of 20% and will be granted an observer position on the board of Daya.

"There is still uncertainty whether the regularisation plan will be implemented as it is subject to regulatory and shareholder approval. The plan is expected to be completed in the spring of 2019," Siem Offshore was quoted as saying.

At 4.06pm, shares in Daya Materials were up half a sen or 16.67% to 3.5 sen, with 36.4 million shares exchanging hands for a market capitalisation of RM71.5 million.