ETITECH become PN1/GN5

PRACTICE NOTE 1 / GUIDANCE NOTE 5: NEW DEFAULT

ETI TECH CORPORATION BERHAD

Type	Announcement
Subject	PRACTICE NOTE 1 / GUIDANCE NOTE 5 NEW DEFAULT
Description	ETI Tech Corporation Berhad (“ETICB” or “the Company”) Default in Payment pursuant to Practice Note 1 (PN1) of the Bursa Malaysia Securities Berhad Main Market Listing Requirements (“Main LR”)
1.         Introduction The Board of Directors of ETI Tech Corporation Berhad (“ETICB” or “the Company”) wishes to announce that ETI Tech (M) Sdn. Bhd. (“ETI Tech”), a wholly-owned subsidiary of the Company, had defaulted in payment pursuant to PN1 of the Main LR, where the total amount outstanding is more than 5% of the consolidated net assets of the Company and the details of the said credit facilities are as below:- Creditor Bank Type of Facility Outstanding Amount as at December 31, 2012 Date of Default Date of Notice of Demand Standard Chartered Bank Malaysia Berhad (“SCB”) Overdraft RM4,358,234.37 November 30, 2012 January 7, 2013 SCB Export Bills Discounting USD929,490.00 November 30, 2012 January 7, 2013 2.         Reasons for Default ETI Tech did not have sufficient funds to service the principal and interest due in respect of the credit facilities granted by SCB. The insufficient of fund was mainly due to the delay in collection and slowdown in current business. 3.         Measures to address the Default ETI Tech is negotiating with its bankers for the restructuring of its current credit facilities. ETI Tech is in the midst of re-strategizing an immediate action to overcome the current situation. 4.         Financial and Legal Implications of the Default  ETI Tech has received Notice of Demand dated January 7, 2013 from the Solicitors of SCB, seeking to recover the entire outstanding amount as at December 31, 2012. SCB will take legal action against ETI Tech of which in the worst-case scenario, a winding up petition might be filed against ETI Tech and ETICB (as corporate guarantor to the said credit facilities). 5.         Business, Financial and Operational Impact of the Default The Default might lead to discontinuity of the Group’s business operation. Despite the above, ETI Tech is strive to manage existing business with limited financing resources. The Management of ETI Tech has taken proactive measures to enhance its financial position to ensure continued operation. 6.         Cross Default The Default constitutes an event of default under the agreement for indebtedness with other creditor banks for ETI Tech, i.e. HLBB and MBB. Creditor Bank Type of Facility Amount of Facilities Hong Leong Bank Berhad (“HLBB”) Industrial Hire Purchase, Trade Bills, Overdraft RM11,150,000.00 Malayan Banking Berhad (“MBB”) Term Loan, Trade Bills and Overdraft RM10,400,000.00             ETI Tech is in the midst of discussion with HLBB and MBB for rescheduling of the payment for the outstanding credit facilities granted by HLBB and MBB. 7.         Major Subsidiary             ETI Tech is a major subsidiary of ETICB. 8.         Solvency Declaration The Management of ETICB is currently arranging a meeting with the Board of Directors to discuss on the solvency position of the Company. Upon obtaining directions from the Board of Directors, an announcement will be made accordingly. **LiangChai: 烂公司是时候收档了.....