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Fwd: AWSJ: National Steel's Demise Roils Malaysia
By web aNtu
21/9/2000 11:01 am Thu
Terjemahan Ringkas: (haraf maaf jika tersasul)
Syarikat besi NSC di Filifina telah lingkup.
Halim Saad melabur RM 3 bilion dengan berhutang kepada beberapa
bank di M'sia dengan saham Hottick sebagai kolateral.
Kini harga saham itu semua sudah sifar.
Danaharta pula tidak boleh berbuat apa2 kerana Hottick
bukan berada dalam negara kita dan Danaharta tidak dapat
mengambil alih kerana tiada kuasa undang2 di situ.
Hottick kini sedang di kejar oleh kreditornya di sana.
Maka beberapa Bank di M'sia kecewa, apa tidaknya, sebab
sia-sia sahaja bagi duit berjuta, dapat sakit pula.
Bank yang malang.....:
AWSJ: National Steel's Demise Roils Malaysia
By Leslie Lopez Staff Reporter
KUALA LUMPUR -- With the Philippines' debt-ridden National Steel Corp.
facing liquidation, the steelmaker's main shareholder -- a company with
close links to prominent Malaysian businessman Halim Saad -- stands to see
its three billion ringgit ($789 million) investment evaporate.
But don't expect Tan Sri Halim or Hottick Investment Ltd., the Hong
Kong-incorporated concern that controls National Steel, to pick up the
tab. Malaysian banks and taxpayers will most likely have to foot the bill
for Hottick's disastrous investment.
Here's why: The three billion ringgit loan Hottick obtained from Malaysian
banks to purchase its stake in National Steel was secured with National
Steel shares, which are now nearly worthless, and is in default.
Malaysia's national debt-restructuring agency, Pengurusan Danaharta
Nasional Bhd., which is now responsible for recovering the loan, says it
has no legal recourse, because Hottick is an overseas corporation.
The National Steel episode is the most dramatic illustration of how a
Malaysian state-backed overseas investment drive went awry. And salvage
efforts like the government bailout in this case -- shifting risk from a
private company to a state institution and local banks -- have distorted
Malaysia's attempts to restructure its corporate sector and irritated some
foreign institutional investors in Malaysian stocks, bankers and
In the Philippines, National Steel's troubles are deepening. The company's
steel plant, located on the southern island of Mindanao, suspended
operations in November because of mounting losses and declining sales hit
hard by imports of less-expensive steel from Russia and South Africa. With
no cash flow, the steelmaker owes Philippine banks almost $340 million it
can't repay. Last week, National Steel's receiver recommended that the
company be liquidated, after Danaharta -- now trustee for Hottick's 82.5%
equity stake in National Steel -- rejected a rescue plan for the company
on the grounds that it was ""vastly skewed towards the domestic
(Philippine) lenders of National Steel.""
In Malaysia, the picture is equally grim. Danaharta, which has sweeping
powers to deal with defaulting domestic borrowers, says it can't move
against Hong Kong-based Hottick because the company is outside its
jurisdiction. What's more, Danaharta and the Malaysian banks that lent to
Hottick don't have any legal claim to National Steel's physical assets.
Those are pledged to Philippine creditors.
Malaysian bankers say Danaharta would be fortunate to recover as much as
10% of the Hottick loan, which is the largest bad loan on the agency's
books. That's assuming Danaharta can realize some return from eventually
selling its National Steel shares. Danaharta officials declined to comment
on the agency's chances of recovering the loan. But one senior Danaharta
executive acknowledges that ""our position is very weak; we only have
Hottick shares as collateral.""
The National Steel debacle is the fallout from an ambitious plan by
Malaysian Prime Minister Mahathir Mohamad, begun in the mid-1990s, to
transform the country into an exporter of investment capital and corporate
expertise. The effort soon saw Malaysian companies purchasing stakes in
everything from U.S. entertainment studios to Albanian housing projects.
But when Asia's financial crisis struck in 1997, many of these overseas
investments turned sour. A sinking Kuala Lumpur stock market and the
ringgit's sharp depreciation crimped the ability of the Malaysian
companies to fund their foreign ventures.
Malaysia's involvement in National Steel began in 1995, when Wing Tiek
Holdings Bhd. -- a Malaysian company controlled by Joseph Chong, a onetime
senior figure in a political party in Dr. Mahathir's coalition government
-- acquired a controlling interest in the steelmaker. The investment,
heralded as signaling growing cooperation between Malaysian and Philippine
business interests, began to look shaky a year later, when Wing Tiek's own
financial troubles started to mount.
Senior Malaysian government officials and people familiar with the episode
say that then-Philippine President Fidel Ramos, disturbed by National
Steel's plight, sounded out Dr. Mahathir on the possibility of other
Malaysian investors taking over Wing Tiek's stake in the company. The
Malaysian officials say Dr. Mahathir then turned to Tan Sri Halim, the
executive chairman and controlling shareholder of conglomerate Renong
Bhd., to salvage the situation.
A deal began to take shape in late 1996, when Hottick arranged to buy Wing
Tiek's stake in National Steel for three billion ringgit. Tan Sri Halim
doesn't appear as a Hottick shareholder or executive in records on file in
Hong Kong's registrar of companies. But people close to the businessman
say his interest in the company is represented by Hottick's main listed
shareholder, Malaysian lawyer Abdul Rashid Manaff. Mr. Abdul Rashid is a
senior partner in the Kuala Lumpur law firm Rashid & Lee. His firm is
Renong's longtime legal adviser, and the lawyer has served as Tan Sri
Halim's personal legal adviser for years.
Tan Sri Halim declined to comment on Hottick. He suggested that queries on
Hottick and National Steel be referred to Mr. Rashid. Mr. Rashid didn't
respond to repeated requests to be interviewed for this article.
In early 1997, Hottick obtained a three billion ringgit loan from four
Malaysian banks, pledging the National Steel shares it was acquiring as
According to people familiar with Tan Sri Halim's corporate plans, the
businessman initially intended that Renong -- a publicly listed
conglomerate with historical links to Dr. Mahathir's ruling political
party -- eventually would acquire Hottick's interest in National Steel.
But that plan was scrapped because of National Steel's
poorer-than-expected cash flow and the bad state of Asian financial
markets by mid-1997. As the economic crisis worsened, bankers close to Tan
Sri Halim say the businessman was distracted from the National Steel
rescue by Renong's own mounting financial woes at home.
Renong, with total borrowings of 25 billion ringgit, or roughly 5% of
total loans in Malaysia's banking system at that time, was struggling, and
Tan Sri Halim was under pressure to quickly hammer out a restructuring
plan. (Renong has managed to restructure 8.4 billion ringgit in short-term
debt through a bond issue. But Tan Sri Halim's troubles haven't been
resolved. Time Engineering Bhd., a company in the Renong stable, still has
to restructure and repay about five billion ringgit in debt.)
While Tan Sri Halim wrestled with Renong's loans, bankers say Hottick's
three billion ringgit loan went bad in 1998, when the company -- which has
no other business interests apart from National Steel -- failed to meet
interest payments. That left the four Malaysian creditors facing the
prospect of taking large write-offs. According to bankers, Malayan Banking
Bhd. and RHB Bank Bhd. have extended about 925 million ringgit each to
Hottick, while Bank Bumiputra and Commerce Asset-Holding Bhd. lent 658
million ringgit and 578 million ringgit, respectively.
Enter Danaharta, Malaysia's debt-restructuring agency. According to
bankers and government officials familiar with the plan, a special
arrangement was devised early last year to cushion the blow to the
Malaysian banks. The four banks sold the loans, together with their
collateral, to Danaharta for a nominal sum of four ringgit. The Malaysian
banks were allowed to spread out provisions for the bad loan over four to
five years to minimize the impact on their balance sheets. The banks will
take 95% of whatever Danaharta eventually recoups from the Hottick loan,
while the agency will retain the remainder.
At the time, several economists and bankers criticized the Danaharta
arrangement, arguing that the agency was coddling the four Malaysian
banks, which they said had made the loan without adequate collateral. They
also contended that the plan amounted to an indirect bailout of Hottick
and its shareholders, because it removed any immediate pressure on the
private company to repay its debt.
Danaharta officials, however, defended the plan, saying the agency would
help the banks eventually recover the bad debt once regional economies
The four Malaysian banks decline to comment on the Hottick loan. But
bankers tracking the affair say Malayan Banking has fully provided for the
sour loan. It isn't clear whether the other three banks have completed
making provisions for their expected losses on the loan.
Bankers now say Danaharta's claim that it has no legal power to pursue the
Hottick debt raises the issue of why the agency took over the loan in the
first place. ""The question of jurisdiction would have been clear from the
start,"" says a chief executive of a Malaysian bank.
Danaharta still maintains it did the right thing. ""Our position is clear.
We had a Malaysian exposure overseas and we are taking the lead to resolve
the problem,"" says a senior official of the agency, who declined to be
James Hookway in Manila contributed to this article.