KUALA LUMPUR (Sept 7): Loss-making TDM Bhd will undertake a debt rationalisation exercise that involves the full settlement of the outstanding rupiah notes held by its Indonesian subsidiary, PT Rafi Kamajaya Abadi.
In a statement today, TDM said under the debt rationalisation exercise, the group will utilise a US$105 million (RM434.3 million) credit facility to fully settle the group's outstanding rupiah notes used for TDM's plantation operations in Kalimantan, Indonesia.
Subsequently, TDM will redeem its investment in fixed income securities, of which the proceeds will be used to fully settle the principal portion of the US$105 million Foreign Currency Revolving Credit-i Commodity Murabahah.
TDM added that upon completion of the exercise, the group's total interest-bearing borrowings and gearing will reduce to RM476.6 million and 0.41 times, from RM766.6 million and 0.68 times respectively as at June 30, 2018.
"This debt rationalisation exercise is a step in the right direction for us. In addition to improving our financial performance by way of savings in future finance costs, the redemption of our fixed income investment will also eliminate the fluctuations in gains and losses arising from currency movements," TDM chairman Raja Datuk Idris Raja Kamarudin said in the statement.
The group noted that another positive outcome arising from this exercise is that it will be able to meet the Securities Commission Malaysia's criteria of being a shariah-compliant counter on Bursa Malaysia.
"This is expected to enhance the group's attractiveness to a wider audience of investors," it said.
In a separate filing with Bursa, TDM said its wholly-owned subsidiary Kumpulan Ladang-Ladang Trengganu Sdn Bhd has also accepted a RM48.9 million credit facility to part finance its replanting and plantation development expenditure at the group's plantations in Terengganu.
"This will support the group's long-term production growth by focusing on replanting of old plantations with new, high yield planting materials," it added.
TDM shares closed unchanged at 24 sen today, for a market capitalisation of RM403.83 million.