Malaysia's Megan Media unit's serial bond restructuring approved by Securities Commission

By Caroline Salls

Pittsburgh, Oct. 20 - Megan Media Holdings Bhd. obtained approval from the Malaysian Securities Commission for the proposed restructuring of wholly owned subsidiary Memory Tech Sdn. Bhd.'s RM 320 million restructuring of its Bai' Bithaman Ajil serial bonds, according to a Friday news release.

The restructuring includes a proposed revision to the terms of the serial bonds, a proposed issuance of Hibah promissory notes and a proposed exemption for the promissory note issuance from complying with Islamic securities offering guidelines, trust deeds minimum contents requirements and Securities Commission fees and charges regulations.

Under the proposed revision, financial covenants of the serial bonds will include total debt/equity ratio in year one not exceeding 1.70:1, not exceeding 2.00:1 in year two; and not exceeding 1.80:1 in years three to seven.

In addition, total debt/EBITDA ratio in year one not exceeding 2.50:1; year two not exceeding 4.25:1; and years three to seven not exceeding 3.50:1.

The issuer can redeem the outstanding BBA serial bonds at par before maturity on April 27, 2007 and/or Oct. 26, 2007.

Any funds raised from any equity issuance by Oct. 26, 2007 will be used for the redemption right, according to the release.

Also, Megan said it has agreed to reward the holders of the serial bonds by issuing promissory notes as a gift, or "hibah," because of the willingness of the serial bondholders to consent to the restructuring.

The Hibah promissory notes bind the issuer to make the following payments to the serial bondholders:

For the period up to Oct. 26, 2007, Megan will pay 1.25% principal amount of series 1 serial bonds; 1.50% of series 2 serial bonds; 2.00% of series 3 serial bonds; 2.50% of series 4 serial bonds; 2.70% of series 5 serial bonds; and 2.85% of series 6 serial bonds.

From Oct. 27, 2007 forward, the company will pay nothing on the series 1 serial bonds; 2.50% of series 2 serial bonds; 3.00% of series 3 serial bonds; 3.50% of series 4 serial bonds; 3.70% of series 5 serial bonds; and 3.85% of series 6 serial bonds.

The promissory notes will cease to exist upon redemption of the corresponding serial bonds.

The serial bondholders approved the restructuring on Sept. 8.

AmMerchant Bank Bhd and BinaFikir Sdn Bhd are the submission adviser and financial adviser for the restructuring.

Parent company Megan Memory Holdings Bhd manufactures data storage products such as computer floppy diskettes. It is based in Selangor, Malaysia.

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