Securities Commission has warned it will delist some 100 financially troubled firms if they fail to show signs of restructuring their debts, reports said Tuesday.

The companies have until Aug 31 to submit their restructuring proposals and get them approved in four months for implementation, the commission's chairman Ali Abdul Kadir was quoted as saying by The Star .

"There are some who think we will not enforce the deadline as there are (some) 100 of them and therefore, there could be an impact on the market if they are delisted," Ali said.

"I think they will be surprised. We are not prepared to wait any longer... the axe will fall on Aug 31."

Ali said the value of the shares of these companies had dropped sharply since they were classified under Practice Note 4 (PN4) as distressed, insolvent and not income-generating.

As such, he said there would be little impact on the stock exchange if these firms were delisted.

"All the investors who cannot stand the heat have moved out of the kitchen, and those who are prepared to face the risk have been given dual warnings," he said.

"Of the 99 companies that are classified under PN4, we are hopeful that at least half of them will be restructured."

Boosting quality

Ali said the move would support a drive to boost quality in the bourse and to build up the current market capitalisation of RM500 billion.

"We want to have more billion-ringgit capitalised companies, maybe 50 of them in 10 years' time and more than 20 in the RM10 billion league as this will generate breadth and depth in the market," he added.

The New Straits Times said since PN4 came into effect in February last year, only 11 of the 99 companies have successfully sorted their finances.

Of the total, 58 have been suspended and others were trading under restrictions, the newspaper said.

Many local companies, recovering from the country's 1998 recession, were hit last year by a fresh economic slowdown.

But the economy has shown signs of recovery this year, with the government predicting growth of 3.5 percent after an anaemic 0.4 percent rise in 2001.

The Corporate Debt Restructuring Committee, set up in 1998 to mediate debt disputes, closed shop last month after resolving 57 accounts with a total debt of RM45.8 billion but it said RM9.3 billion of problem debts remained outstanding. AFP