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AWSJ: Malaysia's Halim Offers.. BTS: Halim buys 21.5%
By Kapal Berita
21/10/2000 7:11 pm Sat
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1) AWSJ: Malaysia's Halim Offers to Increase Stake in Renong......
2) BTS : Halim Saad buys 21.5% of Renong in surprise move...
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AWSJ: Malaysia's Halim Offers to Increase Stake in Renong......
From Asian Wall Street Journal
20th October 2000
Malaysia's Halim Offers to Increase
Stake in Renong, Possibly to Aid IPO
By LESLIE LOPEZ Staff Reporter of THE WALL STREET JOURNAL
KUALA LUMPUR, Malaysia -- Malaysian businessman Halim Saad plans to
increase his shareholding in debt-laden conglomerate Renong Bhd., in a
move analysts say is calculated to make the listing of an affiliated
technology company more attractive to investors.
In a statement to the Kuala Lumpur Stock Exchange on Thursday, Time
Engineering Bhd., a telecommunications company in the Renong stable,
said it has accepted an offer from Tan Sri Halim to acquire Time's
entire 21.56% interest in Renong for 874.4 million ringgit ($230.1
million). The deal, which values each Renong share at 1.75 ringgit,
will raise Tan Sri Halim's stake in Renong to 38.1% from 16.5%. Time
Engineering will continue to be a 46.8%-owned subsidiary of Renong.
The announcement surprised most corporate analysts who track Renong.
They suggested that Tan Sri Halim's purchase will provide Time
Engineering with fresh funds to reduce debt and improve investor
sentiment toward the company's wholly owned Internet unit, TimedotCom
Sdn., which is scheduled to go public in mid-November.
It isn't clear how Tan Sri Halim, who is also the executive chairman
of Renong, will finance his proposed purchase. The Time Engineering
announcement gave no details on how Taraf Perdana Sdn., a private
company majority owned by Tan Sri Halim, will pay for the Renong
shares now held by Time. Tan Sri Halim couldn't be reached to comment
Bankers and analysts will watch the financing issue closely because
Tan Sri Halim faces another potentially crippling funding commitment:
honoring a put option amounting to more than three billion ringgit
that comes due on Feb. 14. The February deadline marks the expiration
of a put option that Tan Sri Halim extended to Renong associate United
Engineers Malaysia Bhd. in 1998. It requires him to buy back a large
block of Renong stock that UEM purchased in 1997. The revelation in
late 1997 that UEM had borrowed heavily to secretly buy the Renong
stock sent the Kuala Lumpur stock market reeling. To appease irate UEM
investors, Tan Sri Halim extended the put option.
Renong flourished in the early 1990s, benefiting from its close
historical links to Malaysia's dominant political party, the United
Malays National Organization, and from Tan Sri Halim's status as the
leading protege of powerful businessman Tun Daim Zainuddin, currently
Malaysia's finance minister. With 12 listed companies in its stable,
Renong boasts investments in many key sectors of the economy,
including infrastructure, telecommunications, banking, property,
manufacturing and transportation.
But today, Renong is by far Malaysia's biggest corporate debtor,
having been hit hard by Asia's 1997-98 financial crisis. The
well-connected company's long-running effort to reorganize is often
used by fund managers and bankers as a gauge of Malaysia's commitment
to restructure its corporate sector.
In mid-1998, Renong's total debt -- including that of UEM -- stood at
20 billion ringgit, or almost 5% of Malaysia's total bank lending at
the time. Of that total, 8.4 billion ringgit was corporate borrowing,
of which 5.4 billion ringgit was owed by Renong, and an additional
three billion ringgit by UEM. The remainder of the company's debt is
largely project-finance loans for various big-ticket infrastructure
In September 1999, Renong finalized a debt-restructuring plan, which
featured the issue of seven-year bonds valued at 8.4 billion ringgit
through the group's cash-rich toll-road operator, Projek Lebuhraya
Utara-Selatan Bhd., or PLUS. However, Malaysia's economic recovery and
lower interest rates have permitted PLUS to redeem 1.1 billion ringgit
in bonds in recent months. Renong officials also say that planned
asset sales and the listing of some of its profitable subsidiaries
over the next year will help the group redeem the rest of the bonds
Investors Hold Back
Still, investor interest in Renong group companies remains weak. This
is mainly due to the group's interlocking shareholding structure, its
still-large debt burden and Tan Sri Halim's large personal financial
commitments, say analysts who track the group.
Executives close to Tan Sri Halim contend that his proposed purchase
of Time Engineering's Renong stake is aimed at addressing these
concerns. They say that the purchase will erase the interlocking
shareholding structure between Time Engineering and Renong. The
proceeds from the proposed sale also will help reduce Time
Engineering's debt burden of 4.5 billion ringgit. The executives say
Time Engineering will repay a large chunk of its remaining debt with
funds raised by the listing of TimedotCom, which owns Malaysia's
largest fiber-optic network and Renong's Internet-related business.
In its statement to the stock exchange on Thursday, Time Engineering
said Tan Sri Halim's offer to acquire its Renong shares isn't
unconditional. Apart from obtaining approval from Time Engineering
shareholders for the proposed transaction, Tan Sri Halim also must
secure a waiver from the country's securities-industry regulatory
agency from having to make a general offer for all outstanding Renong
shares that he doesn't already own.
Executives close to Tan Sri Halim say they don't expect any problems
in securing the necessary approvals from Malaysia's regulatory
Write to Leslie Lopez at firstname.lastname@example.org
BTS : Halim Saad buys 21.5% of Renong in surprise move...
Halim Saad buys 21.5% of Renong in surprise move
By Eddie Toh in Kuala Lumpur
MALAYSIAN tycoon Halim Saad yesterday shocked the investment community
when he agreed to buy a substantial block of Renong shares from Time
His privately-held Taraf Perdana will buy 21.56 per cent of Renong
from associate Time Engineering for RM874.7 million (S$404 million).
A merchant banker said Time Engineering had no choice but to dispose
of the Renong shares as part of the restructuring exercise to retire
RM5 billion in debts.
"Besides Time dotCom, Renong is its only main asset," he said,
referring to Time Engineering's subsidiary that owns a prized
While Time Engineering will simply use the proceeds to shave its
debts, analysts are baffled on why Mr Halim decided to raise his
shareholding ahead of next February when he may be forced to buy 32.6
per cent of Renong shares from United Engineers Malaysia. (UEM)
He had promised to buy the Renong shares from associate UEM if
Renong's share price stayed below RM3.24 by next February. However,
the purchase price will be closer to RM4.50 when the interest charges
The fulfilment of the put option and his latest purchase will boost
his personal stake in Renong to over 70 per cent.
Combined with holdings of his associates, analysts said Mr Halim could
well turn Renong into his private vehicle.
But in the latest deal, Mr Halim has sought a waiver from the
authorities from making a general offer for the rest of Renong shares.
He also wants assurance that the waiver will not affect the earlier
one from a general offer when he gave an undertaking in January 1998
to buy the Renong shares from UEM by February.
A broker said the Time deal could be a prelude to another
restructuring exercise to unlock the value of Renong group.
However, MalaysiaStreet.com said Mr Halim's plan to cough up RM874.7
million to buy the Renong shares from Time Engineering could be his
way of flexing his financial muscle.
"If he can raise that sum, then chances are, he may also have the
resources to raise the RM3 billion to meet his obligation to buy the
Renong shares," it added.