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AWSJ: Syed Mokhtar Al-Bukhary Bid For Government's Pernas Stake
By Leslie Lopez
18/1/2002 1:15 pm Fri
[Note: Read Also: AWise: Prime Ministerial Protégé - Syed Mokhtar Albukhary by Andrew Ho - Editor]
The Asian Wall Street Journal
Malaysian Magnate Makes Bid For Government's Pernas Stake
By LESLIE LOPEZ
Staff Reporter of THE WALL STREET JOURNAL
KUALA LUMPUR, Malaysia -- Malaysian businessman Syed
Mokhtar Al-Bukhary has submitted a bid to acquire Pernas
International Holdings Bhd. in a complex deal valued at about one
billion ringgit ($262.51 million).
Malaysian bankers and officials familiar with the proposal said Tan
Sri Syed Mokhtar wants to acquire the government's controlling
32% stake in the investment holding company Pernas in two stages.
He is proposing to initially purchase a roughly 20% interest for
about 260 million ringgit, or 2.05 ringgit a share. That is nearly a
twofold premium over Pernas's current stock price of about 71 sen.
He then intends to sell several of his privately held assets --
valued at about 700 million ringgit -- to Pernas as part of a plan to
restructure the company's debt of almost two billion ringgit.
Tan Sri Syed Mokhtar submitted the plan earlier this month to Prime
Minister Mahathir Mohamad, who is also finance minister, bankers
said. Dr. Mahathir has yet to make a decision on the matter, a
senior government official said. Tan Sri Syed Mokhtar, a
publicity-shy entrepreneur from Kedah state, couldn't be
immediately reached for comment.
The planned takeover of Pernas, an investment holding company
with interests in property, hotels, manufacturing and trading, is likely
to raise Tan Sri Syed Mokhtar's previously low profile in corporate
A onetime rice trader, Tan Sri Syed Mokhtar in recent years has
quietly built a growing business empire, often using business
associates as nominees in his corporate acquisitions, according to
acquaintances. Over the past year, Tan Sri Syed Mokhtar has
begun to consolidate his private assets -- including investments in
independent power plants, property and a huge port operation --
in listed Malaysia Mining Corp. Bhd., which he controls.
Bankers and close associates attribute Tan Sri Syed Mokhtar's
ascent in Malaysia's corporate scene, in part, to his cordial
relations with Dr. Mahathir, who also hails from Kedah state. Senior
government officials said the Malaysian premier is impressed with,
among other things, the businessman's generous funding for Islamic
charities. Tan Sri Syed Mohktar's private investment vehicle, the
Al-Bukhary Foundation, has built two Islamic arts museums in
Kuala Lumpur and another in Kedah.
Tan Sri Syed Mokhtar has also won plaudits from the government
for his port operation, Pelabuhan Tanjung Pelepas Sdn. Bhd., or
PTP, in which he controls a nearly 60% equity interest through
various business nominees. PTP, a fast-growing port in Johor state
on the southern tip of Peninsular Malaysia, is 30%-owned by
Denmark's Maersk Sealand International and has begun to compete
vigorously with Singapore, the world's second-busiest port after
Hong Kong. PTP scored a major coup this week when Taiwan
shipping concern Evergreen Marine Corp. announced it will move
its container operations to PTP in Johor from Singapore. Dr.
Mahathir praised the Evergreen move, saying it will bolster the
Malaysian government's plans to develop the country as a regional
Tan Sri Syed Mokhtar's increasing prominence could prompt
criticism, however, in a Malaysian corporate and political
environment sensitized to allegations of cronyism. In the wake of
Asia's 1997 financial crisis, the empires of several of Malaysia's
biggest politically favored business tycoons imploded, buried under
piles of bad debts. The biggest casualties: Former Renong Bhd.
Chief Executive Halim Saad and Tajudin Ramli, who once
controlled Malaysian Airline Systems Bhd., or MAS, the national
carrier. Both men were proteges of once-powerful former Finance
Minister Daim Zainuddin and enjoyed close relations with the
Mahathir government, which has been forced to salvage Renong
Tan Sri Syed Mokhtar's bid for Pernas comes less than three
months after the government renationalized the listed company,
which was privatized in 1996. In the initial privatization plan, Pernas
paid 1.15 billion ringgit to acquire stakes in seven listed companies
on the Kuala Lumpur Stock Exchange, plus other assets from
then-controlling shareholder state-owned Perbadanan Nasional
Bhd. Later, Fernrite Sdn. Bhd., a private company owned by 14
Pernas managers, planned to buy 32% of the enlarged group from
Perbadanan Nasional for 495 million ringgit, a deal that valued
each Pernas share at 2.05 ringgit. But the Fernrite purchase was never completed. The 1997 financial
crisis and the depressed Malaysian stock market undermined
Pernas's share price, making the planned management buyout no
But the Fernrite purchase was never completed. The 1997 financial crisis and the depressed Malaysian stock market undermined Pernas's share price, making the planned management buyout no longer feasible.
Pernas has controlling stakes in two other listed companies,
Tradewinds Malaysia Bhd. and United Malayan Land Bhd. Under
the second stage of Tan Sri Syed Mokhtar's takeover plan, the
businessman intends to sell a small sugar refinery operation he
owns to Tradewinds, a profitable concern and one of Malaysia's
biggest sugar refiners. He is also planning to sell property interests,
including several large parcels of land located in Johor state, to
property developer United Malayan Land.