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On behalf of the Board of Directors of Syarikat Kayu Wangi Berhad, we wish to reply your query in your letter dated 26 July 2000 as follows :-
Quote
" The Company had on 9 May 1996 entered into a joint venture agreement with Kumpulan Melaka Berhad to undertake a property development project in Batu Berendam, Malacca. This joint venture project will enable the Company to diversify into the property development sector.
The Batu Berendam's property development project was financed mainly by the RM45 million nominal amount of 3% Guaranteed Redeemable Bonds 1997/2002 ("Bonds"). The security support for the bonds guarantee were sinking funds as stated in the Trust Deed, Guarantee Facility Agreement and Counter Guarantee Facility Agreement dated 1 August 1997. However, due to sudden downturn in our general economy combined with the delay of the relevant approvals by the Government Authority, the property launch could not take up as expected. The slow down in the property market also resulted in poor sales.
With the above mentioned scenarios, the Company was thus unable to set aside the first installment of sinking fund of RM9.25 million due on 7 August 1999. However, we had paid the bond interest of RM1.35 million on 7 August 1999 and guarantee commission on 6 September 1999. Due to the non-compliance of the setting up of the Sinking Funds Account, the auditors report were then prepared giving emphasis in this respect for the financial year 30 November 1999.
On 15 March 2000, The Malaysian Trustees Berhad acting on behalf of the Bond Holders demanded that the Company pay the RM46.35 million (i.e bonds principal and interest) due to the Company's inability to perform and discharge its obligations to pay into the sinking fund totalling RM9.25 million due on 7 August 1999. Subsequent on the 23 March 2000, the guarantor bank (reimbursed by the counter guarantor bank) paid the full amount to the bond holders. Thus, the bond are now redeemed. The amount reimbursed by the counter guarantor bank was subsequently converted to term loan, repayable over a period of 6 1/2 years."
Thank you.
Unquote
cc. Securities Commission
Market Supervision Division
Query Letter Contents :
We refer to your Company's Annual Report 1999.
In accordance with the Exchange's requirements, kindly furnish the Exchange
immediately with your detailed explanation(s) on the qualifications stated in
the Auditors' Report of your Annual Report 1999 for public release.
Yours faithfully
KUALA LUMPUR STOCK EXCHANGE
LATIFAH HJ MOHD YUSOF TAN YEW ENG
Senior Vice President, Listing Operations Senior Manager, Listing Operations
TYE/NMA
Copy :Securities Commission