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BTS: Halim Saad Shareholders Clash
By Kapal Berita

12/10/2000 5:16 pm Thu


Nampak saja OK, tetapi kalau sudah diarah, semua fund managers ini ikut aje... Bayangkan bagaimana EPF boleh melabur dalam Bakun atau bagi "derma" kepada Perwaja.

BTS : Clash seen between minority shareholders and Halim Saad

From The Business Times, Singapore

11th October 2000

Clash seen between minority shareholders and Halim Saad High-level watchdog to be formed by year-end has to decide on put option granted by Renong boss to UEM

By Eddie Toh in Kuala Lumpur

A HIGH-LEVEL committee to protect the rights of Malaysia's long-suffering minority shareholders will be put to the test as soon as it becomes operational early next year when it will have to grapple with the controversial put option granted by tycoon Halim Saad to United Engineers Malaysia (UEM).

The Finance Ministry's Parliamentary Secretary Hashim Ismail said yesterday the watchdog -- comprising six large state-owned funds -- will be formed by the end of this year so that it could begin work by early next year.

Spearheading the movement is the Employees Provident Fund which manages a large pool of workers' savings. It is also the largest domestic fund manager with assets in excess of RM30 billion (S$13.8 billion) in the Malaysian bourse.

Other members include Kumpulan Wang Amanah Pencen (a state retirement fund), Social Security Organisation, Permodalan Nasional Bhd (investment arm of the Malaysian government), Lembaga Tabung Angkatan Tentera (LTAT or the fund management unit of the country's army) and Lembaga Tabung Haji (the pilgrims' fund).

Analysts said the formation of the watchdog is timely as a gauge of the new corporate governance mood in the country.

The litmus test is likely to involve listed UEM's decision on whether to force Mr Halim to buy a substantial block of Renong Bhd shares from UEM when his put option ends on Feb 14 next year. He controls both UEM and Renong.

In 1997, UEM bought 32.6 per cent in parent Renong from unnamed shareholders for RM2.34 billion, or RM3.24 per Renong share. Following a public uproar over the transaction, the tycoon gave UEM the right but not the obligation to ask him to buy the Renong shares if the share price remains below RM3.24 apiece by next February. The counter closed at RM1.35 yesterday.

UEM has said it will "adhere" to the terms in the put option agreement, effectively dismissing the possibility of extending the option.

However, analysts are unsure if Mr Halim is capable or willing to raise about RM3 billion -- equivalent to Renong's current market capitalisation -- to buy the Renong shares and pay UEM the holding cost.

Despite the calibre of the members of the new watchdog, they may not have the power to force Mr Halim's hand or that of his associates.

EPF, LTAT and Lembaga Tabung Haji are substantial shareholders of UEM with a combined stake of 9.11 per cent. EPF is the third largest owner of UEM with a stake of 8.26 per cent. On the other hand, Renong, in which Mr Halim has an estimated 17 per cent stake, owns 37.93 pe cent of UEM.=20

Nevertheless, analysts said it is essential for UEM to fulfil its obligation if Renong's share price remained depressed.

"We think there can only be one positive outcome as far as investors are concerned, which is for UEM to exercise the option and be repaid in full. Any shortfall, substantial or otherwise, is expected to lead to sharp sell-down of the share," said investment adviser Surf88 yesterday.