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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 on Thursday.

Stock-Buyback Plan

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 ventures.

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 early.

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 agencies.

Write to Leslie Lopez at leslie.lopez@awsj.com

http://interactive.wsj.com/

BTS : Halim Saad buys 21.5% of Renong in surprise move...

From The Business Times, Singapore
20th October 2000

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 Engineering.

His privately-held Taraf Perdana will buy 21.56 per cent of Renong from associate Time Engineering for RM874.7 million (S$404 million).

Mr Halim: buying shares from Time Engineering

The share price works out to RM1.746 per Renong share based on a 10 per cent discount on its last traded price of RM1.94.

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 fibre-optics network.

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 are imputed.

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.