FOR IMMEDIATE PUBLICATION
SUNDAY 26 FEBRUARY 2012
NFCorp clarifies use of loan
MP Tony Pua Misleading Public
KUALA LUMPUR --- National Feedlot Corporation Sdn Bhd (NFCorp) responded today to say the opposition MP for Petaling Jaya Tony Pua’s statement that NFCorp had violated conditions of the loan agreement was clearly meant to mislead the public when providing the media with only a selective set of the facts.
His accusations, NFCorp said, did not reflect the full details and true picture on the use of the loan approved by the government for the National Feedlot Centre (NFC) programme.
In a statement to clarify, NFCorp said the loan agreement had to be read concurrently with the implementation agreement, the powers of the company as set out in its memorandum and articles of association and other related documents.
In law, the articles of association represent the understanding between the shareholders of the company on their relationship with each other and the powers of the company as a legal entity on how it would actually conduct its business under the law and in accordance to the Companies Act 1965.
Under the Third Schedule in NFCorp’s memorandum and articles of association, Article 19 (K) entitles NFCorp, “to invest and deal with the money of the company not immediately required in such manner as may from time to time be thought fit.”
NFCorp said that it was important that the loan agreement be read together with the implementation agreement and the company’s memorandum and articles of association for a holistic understanding of MoF’s terms and conditions for the loan.
Also in the same Third Schedule in NFCorp’s memorandum and articles of association, Article 19 (L) states, “To lend and advance money or give credit to any person or company; to guarantee and give guarantees or indemnities for the payment of money or the performance of contracts or obligations by any person or company; to secure or undertake in any way the repayment of moneys lent or advanced to or the liabilities incurred by any person or company; and otherwise to assist any person or company.”
In addition, Article 19 (M) states, “To borrow or raise or secure the payment of money in such manner as the company may think fit and to secure the same or the repayment or performance of any debt, liability, contract, guarantee or other engagement incurred or to be entered into by the company in any way and in particular by the issue of debentures perpetual or otherwise, charged upon all or any of the company’s property (both present and future), including its uncalled capital; and to purchase, redeem, or pay off any such securities.”
NFCorp said the fact that the government subscribed to a preference share in NFCorp would have meant that the authorities had taken cognizance of the powers of the company, among others to extend inter company loans, as provided in NFCorp’s memorandum and articles of association.
The loan agreement signed on 6 December 2007 also provided for the following important clauses which were not highlighted by MP Tony Pua –
12.1 - In the event that the Loan Facility is utilized to fully pay for the purchase of landed properties, the Borrower hereby agrees that it shall create the necessary charge/assignment over such landed properties in favour of the Lender.
12.2 - In the event the Loan Facility is utilized partially to pay for the purchase of landed properties, the Borrower hereby agrees that it shall create the necessary charge/assignment over such landed properties in favour of the
Lender in proportion to the amount of the Loan Facility used for the purchase of the said landed properties, subject to obtaining of agreement by other financiers or parties who contribute to the purchase of the said landed properties. It is hereby understood by the parties that such proportion of the Loan Facility shall rank pari passu with other financing or loans secured for the purpose of purchasing the said landed properties.
In the course of the project implementation, the government had in April 2009 put on hold the building of an Export Quality Abattoir that was to be completed and rented to NFCorp. This was to facilitate a feasibility study of the viability of the feedlot project by an independent consultant appointed by the government.
As such, the effective date on the loan repayment has been renegotiated with the government due to the deferred construction of the Export Quality Abattoir that has yet to be built by the government. The request is for the repayment to only start after the completion of the delayed Export Quality Abattoir.
Had an Export Quality Abattoir capable of 350 heads of cattle a day been built by the government in 2008 and leased to NFCorp as agreed in the implementation agreement, the possibility of the beef production numbers would have been achieved. The contract farmers under the Entrepreneur Development Programme and NFCorp targets would be able to see 246,000 heads of cattle bred by 2015 and deliver 44,000 metric tonnes of beef.
According to NFCorp, it was during this temporary deferment that monies were invested with the objective of ensuring that the company is able to meet its loan repayments. Rather than just placing the monies in money market instruments, it was deemed more prudent a business decision to invest in properties in the short-term. The intention to invest in properties was to hedge the funds in order to protect its value. Clearly this was not a dissipation of funds.
In the event that the Government resumes the NFC programme to construct the Export Quality Abattoir, NFCorp would dispose off its other short-term investments in properties, and the funds and profits will be readily available for the company’s operations.
The property market said NFCorp, is sound and secure, more protected, and less volatile than others, and the investments could be liquidated when the company needs it for the implementation of the bio gas plant, feedlot phase 2 and 3, palm kernel crushing plant and the feedmill.
Just prior to the NFC programme being suspended, NFCorp had taken it sixth draw down amounting to RM64.723 million as per schedule. However, in the following month, the government announced that the Export Quality Abattoir was deferred until a full viability study was done. This made a stringent call for the company to decide what to do with the drawn down funds.
NFCorp said that amounts drawn-down from the special loan account are irrevocable which meant it could not be returned. In addition, the interest rate cost for the funds transferred to the special loan account becomes chargeable regardless of how much of the RM250 million had been specifically drawn down for the various stages of the project.
Therefore, the investment decision was well within the powers of the company as set up in its memorandum and articles of association that provides for NFCorp, “to invest and deal with the money of the company not immediately required in such manner as may from time to time be thought fit.”
NEWS RELEASE prepared and issued on behalf of National Feedlot Corporation Sdn Bhd (NFCorp) by public relations consulting firms - GRA Communications Sdn Bhd and Prestige Communications Sdn Bhd. FOR MORE INFORMATION, please contact GHAZALIE ABDULLAH at +6017 3361090 or ghazalie@gra-pr.com OR HAMIDAH KARIM at +6012 2672397 or hkarim@i-prestige.com.
14 comments:
Companies must not give loans (including advances) to other companies in which directors have financial interest.
Such loans and advances are expressly forbidden by the Companies Act, except under certain circumstances.
The Companies Act also has its provision on when a company is a considered a subsidiary of another corporation. In the context of Company Law, you can't use your own way of determining what is a subsidiary.
So, are the recipient/s of the funds are actually NFC's subsidiaries or merely 'intended subsidiaries'?
NFC, please justify those loans and advances and whether they are permitted by the law.
How I wish somebody pay back the rm180 million (balance is still not release). Leave NFCorp alone to do the business - halal meat for the people.
Alooo,
I'm quite confused with this press statement done by NFC
1) M&A , by-laws are what should you have done if the money you earned are not 'tight' with any third party...let say in this case i.e. the government...in other case i.e. escrow a/c by bank for specific disbursement or receivership manager for winding-up cases
2) how come, we must read the loan agreement together with the M&A...is that a compulsory things to do with all others type of loan agreement?
3) i dont know if i'm correct or not, but anything that beyond the PRINCIPAL ACTIVITY of the company, the normal practices per se must be done through a company resolution...is there any? when did they convene the meeting to pass the resolution? when did they lodge it to SSM?
i'm just confused and need more briefing from nfc
ex company secretary
Shafee and NFC are as usual spinning.
The over-riding factor is the $250 million government loan was given for sustainable cow farming. So, any investment in land and property must be in relation to that farming activity - grazing land, farm house etc.
NOT investments in prime residential land in Putrajaya or condos in Bangsar and Orchard Singapore, S'pore. No cow activities can take place there, can they?
And all these "straightening of record" seem to be taking place AFTER the scandal was exposed. Otw, they would have just 'bungkused' the whole matter and kept all the "investents" in their personal names, for sure!
dpp
we are all of 1 Race, the Human Race
Sigh...what a load of tosh...you just dont swap cows for condos....then again,,,Malaysia boleh...keep it up dumno
Ok, but is investing in 3 luxury condo units in Singapore the best use of NFC's spare funds?
Are these units being rented out and what type of rental returns is NFC getting?
Are there no places in Malaysia where NFC could invest these spare funds?
Questions;
1. Art 19(L) - NFCorp can become AhLong?
2. Art 19(M) - in its entirety its all up to NFCorp how they disburse the loan? tht's essentially public money in the first place right?
Clse 12.1 & 12.2 - if investment rugi, Lender (govt) tanggung? NFCorp can claim charges?
Wah! the gatekeeper dah tak reti nak baca agreement ke? main sign je ke? So now, nak lepas tengkuk, all blame on-pass kat government/public ke?
The NFC`s defense statement is lots of rubbish!.It`s akin to any bank lending my company money to conduct in sundry trade for example and because of non festival months(Hari Rayas ,Christmas, Chinese N Yr etc )causing poor trade, i therefore decided to invest the loan money into the stock market bacause my company`s memorandum and articles of assoc. allows me to invest outside one sundry trade business into another one. Should the bank that lend me money knows about my new venture into stock market investment instead of kedai runcit what do you think they would do? Sure they will demand back the loan money citing abusement of fund usage by me. Even if the NFC`s company bylaws allow for alternative investments but the loan agreement (which is more binding ) with the government is straight forward into the LEMBU business with no offer for alternative other non core investments in it. This is sheer outright abusement of the loan condition. In my kampong we called it `Kita semua sudah kena sembelih lah` NFC guys must be thinking majority of rakyat Malaysia who is not a graduate like me are STUPID. Well i think this time their mentor and big boss, the BN will be gone forever in this coming GE13.
di mana Pak Lah ? [o]
So, after paying Shamsubahrin RM 1.7 million in November to do PR (public relations) work with the police, they now hire two unknown PR firms to spin their yarn.
Syed, they were not authorised to do what they want even if allowed by their memorandum and articles. They have to abide by the terms of their agreement with the government. Someone in government could have given them a waiver to allow them to buy condos, cars, land and use money to start up their chain of restaurants. Is there a "someone" ?
Godfather
The explanation is crystal clear....
Very good answer indeed.
Now the lawyers are playing with the words... tsk... tsk... typical.
The question is... which government servant who agreed on such clause?
Why the big fuss ? Its only RM 250 Million . Small change for UMNO .
Tuan Syed how about highlighting the following :
1. Petronas buy out of Konsortium Perkapalan from Mirzan Mahathir for RM 500 Million in 1998 ( MISC later had to sell 80 per cent of the ships as scrap in 1999 . Most of the ships were unseaworthy )
2.Top Secret Navy Base Construction Contract given to Mukhriz Mahathir worth RM 650 Million by JKR ( Navy Base built till 30 per cent complete and project abadoned in 1998 . RM 480 Million drawndowned . Samy Velu had to make a personal site visit to close the project .Please ask JKR and Navy personnel about this long forgotten fiasco )
3. MATRADE Building Jalan Duta . Contract worth RM 280 Million given to Mukhriz Mahathir ( Building unoccupied for ten years . Unfit and unsafe for human occupation . So bad that even the so called subservient local authorities refused to give CF. Recently some TOUCH UP worth RM 50 Million corrective works done. Still you go visit the building and ask teh occupants about the building . Many are afraid of occupying the building as it is physically falling apart . )
Tuan Syed Why dont you ask your great Ayahanda Tun Mahathir about this wastage ? Isnt this corruption ?
Oh I forgot . You will alway say the Great Ayahanda Tun Mahathir saved us from the Asian Crisis , made us a great country.
Tuan Syed time for you to stop being a lap dog . Corruption is corruption . As a MACC councillor can you open an investigation into you Great Ayahnada Tun Mahathir and his family dealings ?
Answer : NO . Have a good look in the mirror Tuan Syed and enjoy the view.
@anon 8.53,
Can you provide proof to your story ? or is it a fairy tale ?
answer: No. because you will say, go ask this makcik and that pakcik.....
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