continued - The Lion Group

30. BORROWINGS (continued)
(A) Syndicated Term Loans (continued)
(ii) Sale of certain property, plant and equipment of a subsidiary
Megasteel agrees to dispose of certain of its subsidiary’s property, plant and equipment as follows:
(a) Megasteel shall enter into a sale and purchase agreement with a bona fide purchaser for the
sale of certain of its subsidiary’s property, plant and equipment no later than 30 June 2010 or
such extended date (“Target Date”) as may be agreed with the Syndicated Term Loans Lenders
whose loans represent more than 75% of the value of the RM Term Loans and USD Term Loans
inclusive of principal, interests, commission, fees or expenses respectively as defined in the
provisional Term Sheet;
(b) The sale of the property, plant and equipment shall be subjected to the approvals of shareholders
of the Company and other requisite approvals from relevant authorities;
(c) Proceeds from the sale of the property, plant and equipment shall be received by 30 September
2010. In the event the sale cannot be completed by 30 September 2010, Megasteel shall have
the option to extend the completion date for a further 3 months (“Target Completion Date”);
(d) Proceeds (net of transaction costs) from the sale of the property, plant and equipment shall be
utilised to prepay or repay the Syndicated Term Loans due in chronological order of maturity;
and
(e) In the event Megasteel does not procure a sale of the property, plant and equipment by the
Target Date or the sale is not completed by the Target Completion Date, then such event shall
constitute an event of default.
As at 30 June 2010, Megasteel has not entered into any sale and purchase agreement for the sale of
the property, plant and equipment.
Due to the weak market condition, the realisation of the planned disposal of the Group’s assets required
by the Restructured Scheme of the Syndicated Term Loans is expected to be delayed. Nevertheless,
the Directors are actively looking for potential buyers for the assets and they are of the opinion that
potential buyers will be identified. In the event that the planned disposal is not completed by the
stipulated time frame set by the Syndicated Term Loans Lenders, the Directors are of the opinion that
they will be able to seek extension of time from the lenders of the Syndicated Term Loans.
In the previous financial year, pending the approval of the Restructured Scheme, Megasteel was unable
to meet its repayment obligations and was unable to fulfill certain financial covenants for the Syndicated
Term Loans. Accordingly, the entire Syndicated Term Loans have been classified as current liabilities in the
prior year.
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