ANNUAL REPORT 2008 - KNM Steel Sdn Bhd

NOTES TO THE
FINANCIAL STATEMENTS (CONT’D)
15. Loans and borrowings (cont’d)
15.2 Certain bank overdraft facilities of the Group are secured by way of legal charges over certain long term
leasehold land and buildings of the Group and assets of certain subsidiaries.
The bank overdraft for the Malaysian’s subsidiaries are subject to interest ranging from 0.5% to 1.5%
(2007 - 0.25% to 1.25%) above the lenders’ base lending rate or discount rate per annum whilst the bill
payables are subject to interest ranging from 3.97% to 4.54% (2007 - Nil) per annum.
The bank overdraft and bills payable for the overseas subsidiaries are subject to interest ranging from
5.59% to 7.13% (2007 - 6.18% to 10.50%) per annum.
In connection with the bank overdraft and bills payable facilities granted by licensed banks, the subsidiaries
has agreed on the following significant covenants, among others:
(i)
(ii)
(iii)
(iv)
The Group debt to equity ratio shall not be more than 1.75 times at all times.
The ratio of profit before interest and tax to interest expense of a subsidiary shall not be less than
2 times at all times.
Not to dispose or divest any of its tangible assets which will materially and adversely affect its
existing business operation (other than in the ordinary course of business).
Not to dispose or divest any of its material subsidiaries.
15.3 Certain term loans of the Group are secured by way of:
(i)
(ii)
(iii)
Fixed charges over certain land use rights and building of a subsidiary located in the People’s
Republic of China.
Legal charge over the industrial land and buildings of a subsidiary located in the Italian
Republic.
Legal charge over the building of a subsidiary located in Germany.
The secured term loans are subject to interest ranging from 4.49% to 7.52% (2007 - 1.0% to 6.8%) per
annum.
15.4 The unsecured term loans of the Group were supported by way of corporate guarantee by the
Company.
The term loans were subject to interest ranging from 2.75% to 27.11% (2007 - 1.0% to 3.99%) per
annum.
15.5 CP/MTN granted by licensed banks has the following significant covenants:
(i)
(ii)
(iii)
The Group debt to equity ratio shall not be more than 1.75 times at all times.
The finance service cover ratio of the Group shall not be less than 1.5 times at all times.
Not to declare or pay any dividend or make any distributions whether income or capital in nature
to its shareholders in the event that:-
(a)
(b)
a breach of financial covenant would occur if such payment is made; or
an event of default has occurred and is continuing or following such payment, an event of
default would occur.
(iv)
First legal charge over the Syariah compliant Designated Accounts and monies standing
therein.
The CP/MTN are subject to profit rates ranging from 3.69% to 5.80% (2007 - 3.51% to 3.99%) per
annum.
KNM GROUP BERHAD
88
ANNUAL REPORT 2008