to download - Boustead Holdings Berhad

124
Notes to the Financial Statements
23. LONG TERM BORROWINGS (cont’d.)
The medium term notes were issued to refinance the development of the Group’s plantations, and form
part of the RM100 million Commercial Papers/Medium Term Notes Programme which was approved by
the Securities Commission on 21 October 2001. The medium term notes which bear interest at 6.3%
(2003: 6.3%) per annum are repayable in 2005 and 2006.
The Islamic Bonds (IBs) and Redeemable Convertible Bonds (RCBs) bear interest at a weighted average
rate of 6.19% (2003: 6.19%) per annum and are denominated in Ringgit Malaysia.
The Commercial Papers (CPs), IBs and RCBs were issued by a Subsidiary, Boustead Properties Berhad
(B Prop). Progress billings from sales of the Mutiara Damansara and Mutiara Rini projects are assigned
to Escrow Accounts, Profit Service Account and Principal Service Reserve Account for the repayment of
the principal and interest of the CPs, IBs and RCBs.
The CPs are negotiable promissory notes issued under the Syariah principles of Murabahah (cost-plus)
and Bai Al-Dayn (debt trading), in denominations of RM1 million with an issue size of up to RM30 million
nominal value and tenure of 1,2,3,6 or 9 months at the Issuer’s option. As the CPs are non-interest
bearing, the selling price of the CPs are made up of the purchase price and an agreed profit margin.
The IBs are negotiable promissory notes issued under the Syariah principles of Bai Bithaman Ajil,
comprising Primary Notes with non-detachable Secondary Notes. Under an asset purchase agreement,
the Primary Subscribers purchase assets from B Prop at the purchase price and subsequently resell these
assets to B Prop under an asset sale agreement at an agreed selling price. The IBs are issued in four
series where the selling price is equivalent to the purchase price and profit portion. Primary note is in
RM1 million denominations and are attached to the appropriate number of secondary notes. All IBs
redeemed are cancelled immediately and may not be reissued or resold.
The RCBs, issued on a conventional basis, have a nominal value of RM80 million in denominations of
RM1 million, with a tenure of 5 years from the issue date. The RCBs may be converted at the option of
the holder, at the conversion price of RM4.90 per share into a maximum of 16,326,530 new B Prop shares
at any time after issuance to the maturity date. Following B Prop’s recent Rights and Bonus Issues, the
conversion price was revised to RM4.13 on 4 February 2005. B Prop may redeem all but not part of the
RCBs at any time on or after the expiry of 2 1/2 years from the issue date at an accreted value which
is subject to a 130% trigger (30% above the conversion price). At maturity, the RCBs shall be redeemed
at approximately 127% of the issue price. The RCBs carry a coupon rate of 4% per annum which is
payable semi-annually in arrears with the first payment due on 7 January 2004.