Scheme of Arrangement Pursuant to Section 176 of the Companies Act 1965 between Korakyat Plantations Sdn Bhd (In Liquidation) and the Purchasers for the Rehabilitation of Taman Perindustrian Subang Mewah.

Korakyat Plantations Sdn Bhd (In Liquidation)
Official Press Release
28 January 2003

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Proposed Scheme of Arrangement
between Korakyat Plantations Sdn Bhd (In Liquidation) and the Purchasers Pursuant To Section 176 of the Companies Act 1965

The much anticipated Court Convened Meeting for the Proposed Scheme of Arrangement between Korakyat Plantations Sdn Bhd (In Liquidation) and the Purchasers of Taman Perindustrian Subang Mewah pursuant to Section 176 of the Companies Act 1965 was held on 20 December 2002.

The purpose of the meeting was for the purchasers to consider and if thought fit, approve the Proposed Scheme of Arrangement which was introduced by the Liquidators to rehabilitate Korakyat Plantations Sdn Bhd?s abandoned property development project, known as Taman Perindustrian Subang Mewah which is located at USJ 1, Subang Jaya, Selangor Darul Ehsan.

The Liquidators – Mr. Ler Cheng Chye and Mr. Lum Tuck Cheong of Messrs Ler Lum & Co., were appointed by Court on 10 May 2000 as the Liquidators of Korakyat Plantations Sdn Bhd (In Liquidation), a property development company, the developer of the Taman Perindustrian Subang Mewah project.

The Liquidators have made a proposal for the rehabilitation of the project which is an industrial development project, consisting of 478 single-storey, one and a-half-storey and double-storey terrace and single-storey semi-detached factory units.

The project has been abandoned since 1998.

The normal problem faced by any abandoned property development project is the lack of fund to finance its completion. And, in many property development projects, the development land is charged as a security to a financier to obtain bridging financing. Purchasers may require financing from end-financiers who in turn, require security for their loans, which would normally be the same land which is charged to the bridging financier. This presents a highly complicated situation to resolve when problem arises, financially and legally, to all the parties involved and in normal circumstances, the outcome, if any, would not be satisfactory, especially to the purchasers of such project who would normally be in the worst position.

The same problem is faced by Korakyat Plantations and Taman Perindustrian Subang Mewah whereby when the Liquidators were appointed, Korakyat Plantations did not have any fund, even for the winding-up proceedings required under the Companies Act 1965, let alone to complete the project.

In order to save the project, the Liquidators have made a proposal to the purchasers of the project on a self-help rehabilitation scheme, whereby the purchasers would fund the completion of the project.

Under the Proposed Scheme of Arrangement, the purchasers would have to make the following payments:

1. A Top-up Payment equivalent to 20% of the Purchase Price; and
2. The Outstanding Progressive Billings.

These payments would be collected in a fund which will be maintained in trust by the Liquidators in an Escrow Account, only to be utilised towards the settlement of the costs involved in completing the project in accordance to the Proposed Scheme of Arrangement to be sanctioned by the Court.

On 15 August 2002, the original bridging financier of the project who has a first fixed charge on the land, gave their consent to the Proposed Scheme of Arrangement and subsequently, upon the Liquidators? application, the Court ordered that a meeting of the purchasers be held on 20 December 2002 to consider and if thought fit, approve the proposed Scheme of Arrangement.

The Liquidators view that the Proposed Scheme of Arrangement would be the most efficient and fair way of addressing the position of creditors of the Company, in particular the purchasers of the abandoned project who, under normal circumstances would be in a disadvantageous position in view of the various claims of security rights over the development land and the claims of other creditors.

The success of the Proposed Scheme of Arrangement would also serve to resolve the wider social and commercial complications faced in any abandoned property development project, which would in turn bring benefit to all interested parties, whether directly or indirectly.

It was resolved at the Court Convened Meeting by an overwhelming majority of the purchasers present and voting that the Proposed Scheme of Arrangement be approved.

Section 176 of the Companies Act 1965 stipulates that approval of the scheme creditors, in this case the purchasers, is granted if a majority of 51% in number representing three-fourths (75%) in value of the purchasers present and voting at the meeting vote in favour of the proposal.

The result of the meeting, not including units for which the validity of their sale and purchase agreements are being disputed by the Liquidators, surpasses the statutory requirement and is shown in the table below.

In Number

Total number of purchasers present and voting	347	100%
Vote in favour	333	96%
Vote against	1	0.3%
Abstention	13	3.7%

In Value

Total number of purchasers present and voting	RM92,345,612	100%
Vote in favour	RM89,399,133	96.8%
Vote against	RM 112,000	0.1%
Abstention	RM 2,834,479	0.3%

A report to the Court on the outcome of the meeting to obtain Court's sanction, which is required before the Proposed Scheme of Arrangement can be implemented, has been made and if granted, would be binding on all purchasers.

The unique Proposed Scheme of Arrangement is an attempt to adopt a more proactive and constructive approach in the winding-up of companies with the intention of achieving a more advantageous distribution for creditors. In doing so, the Liquidators have been working closely with the authorities in the spirit of "Malaysia Incorporated", a pragmatic policy introduced by the government to develop the country to achieve the aspirations of Vision 2020.

The Proposed Scheme of Arrangement was also devised on the basis of meeting wider social objective in reviving such abandoned projects whereby otherwise the purchasers of the project who are unsecured creditors of the Company, may be limited to a negligible or nil distribution in the winding-up generally.

The Proposed Scheme of Arrangement does not deal with other class of creditors which would still be subjected to the normal process of winding-up stipulated in the Companies Act 1965.

Nevertheless, it is foreseen that the implementation of the Proposed Scheme of Arrangement would have many advantages and provides a favourable overall effect on the recovery of the Company's assets in view of the possibility of realisation of the project's unsold units or the Company's units.

The Liquidators view the overwhelming support for the Proposed Scheme of Arrangement as a sign of confidence in the value of the project and the potential of USJ 1 becoming a thriving district in the near future.

The Liquidators congratulate the Taman Perindustrian Subang Mewah Pro-Tem Working Committee, especially its Chairman, Tuan Haji Rathi B. Haji Ishak on the approval for his commendable effort in obtaining the statutory approval for the Proposed Scheme of Arrangement.

The Liquidators also express appreciation to all the 23 financial institutions which are involved in this project as financiers for their commitment and support, without which, the Liquidators may not have come to this stage in realising the Proposed Scheme of Arrangement.

The Liquidators also thanked Yang Berhormat Datuk Lee Hwa Beng, the State Assemblyman of Subang Jaya Constituency for his support which has given the Liquidatorts the confidence and energy to persevere since the conceptual stage of the Proposed Scheme of Arrangement.

Ler Lum & Co., an internationally affiliated firm of Chartered Accountants, is determined to play a positive role in the revival of the country's economy since the last economic crisis, focussing in the area of legal, commercial and financial remodelling of abandoned property development projects into viable and competitive projects in the current economic environment. Taman Perindustrian Subang Mewah is a pioneer benchmark project for a number of other projects that is presently under the firm's care. Details of the Proposed Scheme of Arrangement can be obtained from the firm's office or its website, www.lerlum-hlb.com.

The Liquidators anticipate that the success of the Proposed Scheme of Arrangement would pave the way and become a model for rehabilitation of other abandoned property development projects in the country which normally face various legal, commercial and financial complications.

The Liquidators also state that a Court Injunction Order has been received at 10.00 a.m. 27 January 2003, not to implement the Proposed Scheme of Arrangement. The Court Injunction Order was given on ex-parte application by 2 parties and an inter-parte hearing has been ordered to be held on 30 January 2003.

Queries on the above may be directed to:

Mr. Chiew Kin Wee or Ms. Sharon Leng
Ler Lum & Co.
B-3-11, Megan Phileo Avenue
12, Jalan Yap Kwan Seng
50450 Kuala Lumpur.
Tel: 03 2715 1555 Fax: 03 2163 4609

Corporate Recovery Services

Korakyat Plantations Sdn Bhd (In Liquidation) Official Press Release 28 January 2003

Korakyat Plantations Sdn Bhd (In Liquidation)
Official Press Release
28 January 2003