KUALA LUMPUR (Feb 10): Shares of Perwaja Holdings Bhd fell as much as 30% in early trading, after the Practice Note 17 steel maker aborted its regularisation plan, following the lapse of its agreements with Chinese conglomerate Tianjin Zhiyuan Investment Group Co Ltd (Zhiyuan).

At the close of morning session, Perwaja's stock fell 3 sen or 30% to 7 sen, with 10.45 million shares traded, for a market capitalisation of RM39.2 million. Its 200-day average trading volume is about 1.18 million.

Perwaja executive director Tan Sri Pheng Yin Huah told theedgemarkets.com today that the company aborted its plan, because it has yet to get the green light from its creditors, Petroliam Nasional Bhd (Petronas) and Tenaga Nasional Bhd (TNB), to the proposed regularisation scheme.

“Zhiyuan did not fulfil its promise [to bring in funds] on time. So Petronas and TNB didn’t accept and didn't agree with Zhiyuan’s proposed plan. We had to abort the plan,” he said via telephone.

“We will continue to look for a new partner, probably from China as well. We have to decide (on the next course of action) by the end of March,” Pheng added.

In November last year, Pheng told The Edge weekly that the banks have accepted the restructuring plan, but Petronas and TNB, in which Perwaja owes RM132 million and RM250 million respectively, have yet to give their nod.

At that time, Pheng did not foresee the two creditors blocking the plan, as he said they would be able to recover 70% of their outstanding amount.

On Wednesday, Perwaja announced the proposed regularisation scheme has been aborted. The loss-making company said the parties were not able to fulfil the conditions precedent within the timeline stipulated under the master framework agreement and the supplemental master framework agreement signed between Perwaja, Perwaja Steel Sdn Bhd and Zhiyuan’s wholly-owned unit Zhiyuan International Investment & Holding Group (HK) Co Ltd.

To recap, Perwaja and its subsidiary Perwaja Steel entered into a master framework agreement with Zhiyuan in July 2015, to formalise arrangements in relation to the proposed regularisation scheme. Under the deal, Zhiyuan was to pump in RM1.8 billion to revive the steel maker.

The plan could have seen Zhiyuan emerge as the largest shareholder in Perwaja, with a 64% stake.