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FEER: Tajudin's Impunity - AWSJ: Danaharta SuperPower
By FEER Intelligence

4/4/2002 2:29 pm Thu

Tajudin's Impunity

Malaysia's tycoons have always been quite cavalier with the public purse and court documents furnished in a recent case between Malaysian businessman Tajudin Ramli and Danaharta, the state asset management agency, only confirm it. Tajudin used to control national carrier Malaysia Airlines and still runs cellular-phone concern Technology Resources Industries. In 1998-99, Danaharta took over 1.4 billion ringgit ($368 million) in loans Tajudin had taken from local banks as well as shares Tajudin had pledged against those loans. These included a 17.3% interest in TRI. All the loans had gone bad. The documents revealed that Tajudin, a protege of former Finance Minister Daim Zainuddin, did not service the newly consolidated debt even once, though Danaharta said it would accept full payment at 942 million ringgit--a discount of 32.7%. Nor did he bother to attend many meetings called by the agency. In early January national utility Telekom Malaysia approached Danaharta to buy Tajudin's interest in TRI at current market prices, then 2.40 ringgit a share. Tajudin agreed but demanded 24 ringgit a share. In the event, Tajudin lost his case to stop Danaharta from selling his TRI shares. He is appealing against the decision.

The Asian Wall Street Journal
2 April 2002

Malaysia's Tajudin Files Appeal
Against Danaharta Court Ruling


KUALA LUMPUR -- Malaysian businessman Tajudin Ramli is appealing Friday's High Court ruling that rejected his bid to prevent a government agency from selling part of his stake in Technology Resources Industries Bhd.

"We filed an appeal on Saturday," his lawyer, Ong Chee Kwan, said Monday. "No date has been set for a hearing." The move was expected after Mr. Ong told reporters right after Friday's ruling he had instructions from Mr. Tajudin to appeal.

The high profile court case left Mr. Tajudin facing an increasingly likely scenario in which the government's debt-restructuring agency, Pengurusan Danaharta Nasional Bhd., could sell part of his stake in TRI held as collateral for unpaid loans.

Mr. Ong said he is waiting for a complete decision to be issued by the High Court and then would press the Court of Appeal to set a hearing "as soon as possible ... If it's too late, the question will become academic," he said.

In a 31-page draft summary of the ruling, the High Court decided in favor of Danaharta, saying the agency's powers to recover loans and sell assets are legally protected from court challenges.

The ruling detailed Mr. Tajudin's financial difficulties and concluded he is unable to service his debts despite a steep discount on the amount owed and a number of extensions.

Mr. Ong noted the court battle is centered around whether Mr. Tajudin has defaulted on interest payments over the 942 million ringgit ($247.8 million) owed and not a default on an additional 130.4 million ringgit payment to Danaharta for a share rights issue, part of the company's 3.5 billion ringgit debt restructuring plan. Mr. Tajudin contends the interest payment is due at the end of June.

Danaharta recovered in 1998 and 1999, loans from three banks totaling more than 1 billion ringgit on which Mr. Tajudin had defaulted.

Mr. Tajudin's debt stood at 1.32 billion ringgit by the end of last year, but Danaharta agreed to give him a discount of 373.9 million ringgit, reducing the amount to 942 million ringgit.

Mr. Tajudin had a 24% stake in mobile operator Technology Resources Industries Bhd., but the holding has been diluted by the equity issues of the group's ongoing debt restructuring plan.

Danaharta holds most of the stake, or 17.3%, before the restructuring, as collateral for outstanding loans. Already its stake has been diluted to 10.6% following a restricted share issue.

Danaharta also holds as security on the loans, a 44.8% stake in Tajudin's Naluri Bhd., through which he previously owned a controlling stake in national carrier Malaysian Airline System Bhd. and an 80% stake in Promet (Langkawi) Resorts Sdn. Bhd.

The judgment said Mr. Tajudin has now defaulted, to Danaharta, on an interest payment on the loans for 18.7 million ringgit and the 130 million ringgit for subscription to the rights shares.

The agency has given Mr. Tajudin 30 days to pay the 130 million ringgit, "failing which Danaharta will be free to look at other recovery options." The payment deadline to subscribe to the rights shares is April 5.