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ALIRAN: Another Bailout [MAS]
By Anil Netto
23/12/2000 10:18 am Sat
Aliran Media Statement
The Finance Ministry's bailout of Tajudin Ramli's Naluri Bhd appears to be
another case of "privatising the profits and socialising the losses."
The deal will see the Ministry buying Naluri Bhd's 29.09 per cent stake in
loss-making Malaysia Airlines System Bhd (MAS) at more than twice the
market price. In effect, Naluri will receive a premium of 121 per cent or
close to RM1 billion more than market value as the Finance Ministry (and,
by extension, Malaysian taxpayers) will be paying RM8 ringgit per MAS share
when the market price was only RM3.62 on 20 December.
The premium will relieve Naluri, saddled with RM888 million in bank
borrowings, and Tajudin, reportedly burdened with huge personal debts, of
much of their financial difficulties. Tajudin is chairman of both MAS and
MAS has posted four straight years of losses and is saddled with over RM9
billion in debts. Its financial position today is much worse than it was
when Naluri acquired the shares; so there is no justification for the
Finance Ministry to pay any premium over market price.
Even if there was a premium to be paid - which considering MAS' financial
woes sounds ridiculous - how can the Finance Ministry justify paying a 121
per cent premium? Was there an independent valuation carried out?
Recently Finance Daim Zainuddin announced Khazanah's pending purchase of 20
per cent of TimeDotCom Bhd shares and added that the "price per unit share
would be based on a professional evaluation by a consultant" - an
independent one, we presume. The people have a right to know if a similar
independent professional valuation was carried out to determine the MAS
The news of the Naluri-MAS deal comes together with the revelation that
Halim Saad is deferring payment on the exercise of his put option in the
Renong-UEM deal. Halim announced that he would only be paying the RM3.2
billion for the 31 per cent stake in Renong Bhd he is buying from United
Engineers (Malaysia) Bhd (UEM) in instalments. He is now expected to pay
RM300 million in three equal tranches next year and the balance on 14 May
2002. Halim's deferred payment and the disposal of Renong assets to UEM for
RM5.43 billion have triggered a selldown on Renong and in particular UEM
Prime Minister Mahathir Mohamad has condemned foreign critics for
suggesting that the lack of transparency and reforms in corporate
governance was pulling down the Malaysian stockmarket. If the government
would only care to listen, it is not just foreign analysts but also many
concerned Malaysians who are critical of what are widely perceived as
incestuous deals and wheeling-and-dealing, often at the expense of minority
shareholders and other ordinary Malaysians.
As long as mismanagement goes unpunished and favoured but troubled tycoons
are allowed easy escape routes, confidence in the Kuala Lumpur Stock
Exchange and the economy in general will not improve.
Although the authorities have introduced some minor reforms in the capital
markets, they seem to be missing the wood for the trees. Certainly, the
introduction of measures such as T+3 will help to curb unscrupulous market
players. But the government should take a closer look at why there has been
much criticism and uneasiness over recent major deals.