Bina Puri scheme of arrangement wins creditor backing, awaits court sanction

PETALING JAYA (July 1): Bina Puri Holdings Bhd has secured scheme‑creditor approval for its proposed scheme of compromise and arrangement, moving a key step closer to formalising its debt restructuring under Sections 366 and 368 of the Companies Act 2016.

The scheme will only become effective once it is sanctioned by the High Court of Malaya and the sanction order is lodged with the Companies Commission of Malaysia.

According to the company’s announcement yesterday (June 30), the scheme was approved by 87.62% in value of Scheme Creditors present and voting at the court‑convened meeting held on June 30, 2026, comfortably above the statutory 75% in value threshold required under Section 366(1).

The terms voted on are set out in the Explanatory Statement dated May 18, read together with the Notice of Errata and amended Scheme Paper dated June 22, both of which were circulated to scheme creditors pursuant to Sections 366 and 369.

The company has instructed its solicitors to proceed with an application for court sanction; the scheme will only become binding on Bina Puri and its scheme creditors once the court grants the sanction order and it is lodged with the registrar.

Focus on unsecured claims and “sustainable” debt

The scheme targets the unsecured claims of Bina Puri’s scheme creditors, including bilateral bank financings and certain guaranteed liabilities of subsidiaries. Major components include the creation of “Sustainable BPHB Debt” and a series of debt‑to‑equity and Islamic debt instruments designed to restructure approximately RM110.1 million of outstanding liabilities into a more manageable profile.

Under the Explanatory Statement, a pro‑rata portion of each scheme creditor’s outstanding liabilities is to be restructured into Sustainable BPHB Debt, split between conventional and Shariah‑compliant tranches.

This sustainable debt carries a 7‑year term with a step‑up principal repayment schedule and a fixed 5% interest/profit rate, with repayment intended to be supported by projected cash flows from projects undertaken by Bina Puri Builders Sdn Bhd, a wholly owned subsidiary.

The revised numbering and tables in the Notice of Errata clarify these repayment profiles and cross‑references without altering the overall mechanics.

RCUIDS and equity conversion mechanics

A key instrument in the scheme is the Redeemable Convertible Unsecured Islamic Debt Securities (RCUIDS), which will be issued at RM0.35 per RCUIDS with a conversion rate of 1 RCUIDS to 1 ordinary share. RCUIDS have a 7‑year tenor and may be redeemed by the issuer at any time before maturity; any RCUIDS still outstanding at the Maturity Date must be mandatorily converted into new Bina Puri shares.

To moderate conversion flows, the scheme caps the percentage of each holder’s RCUIDS that may be converted in any given year before maturity (10% after the first anniversary, 30% after the second, 60% after the third, and up to 100% after the fourth).

The RCUIDS incorporate a profit element paid as “coupon‑in‑kind” in the form of new ordinary shares at a stepped profit rate of 2% (Years 1–3), 3% (Years 4–5), 4% (Year 6) and 5% (Year 7), calculated on the RCUIDS held at each anniversary.

Ordinary shares issued under the scheme, whether as direct settlement, put/call‑option shares or RCUIDS profit, are priced at RM0.35 and rank pari passu with existing shares, save for distributions with record dates before their issue.

Put and call options backed by Kuching land security

Another distinctive feature is the put and call option structure over certain ordinary shares issued under the scheme. Scheme creditors receive ordinary shares subject to Put Options in their favour and Call Options in favour of the Put Grantor, Borneo 1 Stop Business Sdn Bhd, a company wholly owned by major shareholder Chai Chan Tong, who also serves as its sole director.

The rights of scheme creditors (as “Put Optionholders”) to put their ordinary shares back to the Put Grantor are staggered over a five‑year period, with purchase percentages rising from 10% after the first anniversary to 40% in the fifth year, and expiring 14 days after the fifth anniversary if unused.

To secure the Put Grantor’s obligations, the scheme provides for first‑ranking legal charges to be created over five town‑land parcels in Kuching North Land District, together valued at approximately RM25.27 million, backed by Chai Chan Tong’s personal guarantee.

These “Put Option Security Assets” are currently charged to Big Grain Credit Sdn Bhd and are to be redeemed before the sanction date so that new first‑ranking charges can be granted to a trustee holding the security for the benefit of Put Optionholders.

In the event of default by the Put Grantor — such as failing to complete a put‑option purchase within the specified timeframe — the scheme sets out detailed enforcement mechanics.

Put rights for all creditors crystallise, affected creditors may sell shares within a defined “Sale Period”, and any shortfall against the RM0.35 put price is intended to be funded from enforcement of the Put Option Security Assets and, if necessary, a call on the personal guarantee.

Where trading in Bina Puri shares is suspended and creditors cannot sell, the scheme provides for cash compensation funded from realisation of the security assets and the guarantee, with subsequent transfer of “Relevant Unsold Shares” back to the Put Grantor or the guarantor.

Adjustment mechanisms and creditor safeguards

The scheme embeds a series of adjustment mechanisms designed to reconcile creditors’ unsecured and secured positions once actual recoveries are known:

1) Shortfall/surplus adjustments: After secured assets are realised, the Bilateral Facilities Secured Debt and Bilateral Facilities Unsecured Debt for each financier are recalculated to reflect actual “Recovery Proceeds” (net sale proceeds plus any assigned contract proceeds). Shortfalls increase unsecured debt; surpluses reduce it, triggering corresponding adjustments to upfront cash payments, sustainable‑debt principal and interest, ordinary share entitlements, put/call‑option shares and RCUIDS.

2) Cash sweep and reserves: A cash‑sweep mechanism applies “Excess Cash” (defined by “Actual Cash Balance” net of “Reserved Funds”) toward accelerated repayment of Sustainable BPHB Debt in inverse order of maturity, subject to maintaining finance service reserve accounts and Working Capital Reserves funded via a rights issue.

3) Monitoring and covenants: The scheme calls for a Financial Monitoring Accountant to oversee cash‑flow reporting and excess‑cash computations; Bina Puri Builders Sdn Bhd is to provide a corporate guarantee for Sustainable BPHB Debt; and BPHB is restricted from declaring dividends while any part of the sustainable debt remains outstanding without majority unsecured‑creditor approval.

Termination provisions allow scheme creditors to declare an event of default and terminate the scheme if the Restructuring Effective Date does not occur by the Longstop Date, or if BPHB materially breaches scheme terms before the scheme becomes effective, subject to cure periods.

If BPHB breaches scheme terms after the Restructuring Effective Date, scheme creditors may seek remedies under Section 369D of the Companies Act 2016.

Legal status and creditor guidance

From a corporate‑governance and Bursa perspective, the key points are:

a) The scheme has obtained 87.62% in value creditor approval at the court‑convened meeting, exceeding the statutory 75% voting threshold.

b) The scheme is not yet effective; it will only become binding on Bina Puri and its scheme creditors following High Court sanction and lodgement of the sanction order with the registrar.

c) The structure is complex, involving sustainable debt, equity, RCUIDS, put/call options, cash‑sweep mechanics and detailed adjustment provisions that will operate over several years.

To repeat, the scheme’s implementation remains subject to High Court sanction and the fulfilment of all conditions precedent, and creditors are advised to rely on the full scheme documentation and independent advice.

..........

Read about emerging trends, data-backed insights, growing subsectors, and expert commentaries in EdgeProp print. Subscribe now for your free copy!