Laman Webantu   KM2A1: 2830 File Size: 10.6 Kb *

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.....:

  1. Malayan Banking Bhd. RM925 juta
  2. RHB Bank Bhd.: RM925 juta
  3. Bank Bumiputra: RM658 juta
  4. Commerce Asset-Holding Bhd.: RM578 juta

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 economists say.

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 collateral.

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 rebounded.

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 identified.


James Hookway in Manila contributed to this article.