Transmile ... Jul10

Transmile Group Bhd said the High Court had granted a restraining order under Section 176 of the Companies Act 1965 to halt further proceedings and actions taken against the company and Transmile Air Services Sdn Bhd (TAS) for 90 days starting July 16 2010.
Transmile and TAS have obtained an order to convene a meeting of scheme creditors within the aforesaid period to seek approval for their respective schemes of arrangement.

The implementation of their respective schemes of arrangement will require approvals and/or consents from other regulatory authorities including shareholders, where required.

The restraining order is granted in relation to the following events:
• TAS has, pursuant to a commercial papers/medium-term notes programme, issued notes with an aggregate face value of RM105mil, whereby it had defaulted in the payment of the notes due on Aug 28, 2008.

• Malaysian Trustees Bhd (MTB) had, on March 26, 2009, served a notice to demand TAS to pay the defaulted amount of RM106.1mil, which includes the principal amount and coupons.
• Subsequently, a winding-up petition was served on TAS by MTB on June 4, 2010 as TAS had failed to pay the oustanding amount.

The restraining order will allow Transmile and TAS to finalise a conclusive debt-restructuring proposal with the lenders under a scheme of arrangement to restructure the debts, including the outstanding amount.

The debt-restructuring proposal was an integral part of a plan to regularise the company’s financial condition pursuant to Practice Note 17. The full details of the proposed scheme of arrangement will be announced in due course.

Transmile said the restraining order was not expected to have any material impact on its financial and operational matters.

Notwithstanding that, the service of the petition may on its own trigger or result in a termination event or event of default on TAS’s business contracts. In the event such contracts are terminated, TAS’s operations will have to cease and as a result, the group will suffer adverse financial consequences.