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Awise: Deal Heaven in the Land Dr M. Made Famous
By Adrian Tan
13/1/2002 3:42 pm Sun
[Banyak 'deal' kerana banyak masalah sehingga banyak yang sudah sakit dan
hampir tak bernyawa! Inilah wawasan yang asyik tidak menjadi nampaknya.
Deal Heaven in the Land Dr M. Made Famous
By Adrian Tan, AsiaWise
For regional investment bankers and brokers the place to be in 2002
is Kuala Lumpur. The diary is marked full of possible corporate
finance activities despite a weak economy. And successful
divestments need bullish buyers to part with their money at seller
Recently renationalized United Engineers (UE) plans to list toll road
operator PLUS (penciled in for the second half of 2002) and this will
be one of Malaysia's biggest ever IPOs. UE?s Renong should finally
be selling rather than just talking about selling assets, i.e. its stakes
in telecoms (Time Engr.), cement CIMA), banking (Commerce Asset),
oil and gas (Crest Petroleum), hotels (Faber) and transport
The plan is to reduce group debt (buyers willing) by about $4.3
billion to $3.7 billion and to transform Renong into a property
Others, too, have caught the degearing flu, to coin a phrase.
Malaysian Resources (MRCB) wants to dispose of stakes in banking
-- RHB -- and media -- New Straits Times Press and TV3; it also
wants to sell its 70% stake in Sepang Power to Tenaga (listed
government electricity utility) leaving the group focusing mainly on
property and construction.
If all these sales go through, MRCB could raise up to $267 million in
cash to help repay debts of over $328.9 million.
Multi Purpose Holdings Bhd.(MPHB) wants to remain in gaming (via
a 30.4% stake in Magnum), stockbroking and insurance, and
shipping; but dispose of interests in property (Banda Raya), banking
(Alliance Bank) and power businesses (Sarawak Enterprises) to
reduce debts of over $342 million.
Then there is the ongoing government-inspired restructuring of the
banking sector. RHB group and Utama Banking Group are
negotiating a merger of their banking businesses. Last week a Dow
Jones Newswires report, quoting the usual unnamed banking and
government sources, said that the deal between RHB and Utama had
been abandoned. Rumor is that the banking businesses of RHB and
Commerce will be merged.
This time in 2001, RHB group?s banking interests (third largest) were
supposed to be in the process of being taken over by one of the
smallest of the 10 anchor bank groups, Alliance Bank. Now
patronless Alliance is expected to disappear.
In July there will be a pageant to decide which three of Malaysia's
five mobile network operators should be granted 3G licenses. The
winners will be Telekom, unlisted Maxis and DiGi.Com. Technology
Resources Industries and Time dotCom are expected to merge with
TRI meanwhile is restructuring among other things to avoid a $375
million Euroconvertible bond default, and a loan from the national
asset management company. It also has to find acceptable
shareholders for its restricted share offer.
Tenders for the construction of the $2.4 billion Bakun hydroelectric
dam are to be called and construction companies are busily
preparing to bid for contracts, and lining up financing and foreign
Foreigners will play only bit parts except in the sales of stakes in
Malaysian Airports and Malaysian Air System. Asset divestments will
be to other Malaysian corporations or cash-rich government bodies
like the state pension fund, though some of PLUS?s shares will have
to be sold abroad.
And now that the controlling shareholders of MRCB and MPHB have
changed, divestments may not be a priority if the banks decide to be
patient. Last year, MRCB sold its 22.7% stake in RHB to Utama, a
deal that is still to be completed.
Mid 2000, investment bankers and brokers were expecting Singapore to be deal heaven - what with government linked companies restructuring and banks unwinding their complex crossholding structures. Between a weak stock market and the unwillingness of sellers to accept buyers? valuations, deal flows have been a disappointment to over-staffed M&A and corporate finance teams. This may be repeated in KL.