KUALA LUMPUR (July 15): Perwaja Holdings Bhd has inked a master framework agreement (MFA) with China's Tianjin Zhi Yuan Investment Group Co Ltd to restructure the loss-making Malaysian steel company.

Perwaja's (fundamental: 0; valuation: 0) group executive chairman Datuk Alan Ong said the group was eyeing a turnaround in its business by current financial year ending June 30, 2016, after the completion of the restructuring.

"In 2016 itself, we can expect Perwaja to turnaround, by the time the scheme is completed. So we'll be seeing some small profit for FY16," said Ong at a press conference today, after the MFA signing ceremony.

According to Ong, Practice Note 17 entity Perwaja's restructuring scheme will include a proposed regularisation of its balance sheet and reduction of accumulated losses.

He said the scheme, which involved a debt restructuring, included a recapitalisation, which aims to raise up to RM2.2 billion for Perwaja via a special issue and proposed rights issue with warrants.

Ong said Tianjin Zhi Yuan would subscribe for the entire special issue amounting to RM1.7 billion, besides its entitlement of up to RM100 million under the proposed rights issue with warrants.

The subscriptions will give Perwaja a capital injection of RM1.8 billion, according to him.

With Zhiyuan's subscriptions, the company's stake in Perwaja will stand at around 37% after the first tranche of the special issue, before increasing to 64% upon full injection of the RM1.8 billion.

Perwaja's share trade has been suspended today, in conjunction with the corporate annnouncement.

Prior to the suspension, Perwaja was last traded at 28 sen yesterday (July 14), for market capitalisation was RM156.8 million.

(Note: The Edge Research's fundamental score reflects a group’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)