New PG Industries investor, Dewei Investments Limited has offered $10 million for the purchase of the entire share capital of the company. According to a circular by the group’s board of directors, the proposed transaction also seeks to make a compromise offer to creditors for final settlement of all balances existing as at 31 December 2015 as well provide working capital and funds required for retooling.
PG directors consider the offer as fair considering that the company had negative equity position of $13,121 million as at 31 December 2015 and the cash offer was viewed against the assets of the company which have a book value of $12 464 million.
In addition to that, the company has also defaulted on the existing scheme with its creditors as it has failed to meet its quarterly payments to creditors per current scheme of arrangement.
“Given the current balance sheet position and declining trading trends, the directors are of the view that unless a solution to the company’s funding crisis is concluded, the company can no longer continue operating as a going concern. It is the directors opinion that the offer being proposed is more beneficial to all PGIZ stakeholders than any other practical alternatives.”
The transaction is expected to see the company paying its dues to creditors in addition to restoration of a positive equity position as well as meeting future funding requirements. According to the circular, the company is in serious need of working capital and failure to approve the proposed scheme will lead the company into judicial management or liquidation.
PG is currently unable to trade out of its debt position without a compromise with creditors. Upon the successful adoption of the transaction, the entire share capital of PGIZ will be held by the investor Dewei Investments. PG applied to enter into a scheme of arrangement with its shareholders and different class of creditor in December 2013 and was subsequently registered in April 2015.
The company has to date failed to meet the first four quarterly payment commitments of 16 October 2015, 16 January 2016, 16 April 2016 and July 16, 2016 and the firm says in the absence of a credible recapitalization plan, the company will continue to be in default. — Wires.