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The Star Online: Business

Halim's love affair with PLUS

Posted: 28 Mar 2014 09:00 AM PDT

TAN Sri Halim Saad's affinity for North South Highway (NSE), which is the mainstay of PLUS Expressways Bhd, is a given.

He oversaw the construction of the 772km highway even though he did not have an inch of experience in building tolled roads, nurture it into a cash cow or know how to cut capital expenditure and most importantly, how to monetise the asset.

Halim, the former executive chairman of Renong Bhd, built an empire around the NSE. He parked the highways into a subsidiary of Renong Bhd, called UEM (M) Bhd that was listed.

Subsequently, UEM was de-listed in 2001 and in the following year it came back into the market in the form of PLUS Expressways Bhd.

In the heyday of the stock market bull-run in 1990s, UEM was the darling of the investors. It was a cash cow and provided businesses for many other companies within the group. There were several listed companies under UEM that depended on the highways as their core business.

Because he knows the group well, Halim is confident that he will be able to cut off the excesses and keep the toll rates on the highway unchanged, says an executive close to him.

"That is the reason why he keeps pressing the Government with proposals to take back the highway. He has so far made two proposals and will continue to look at PLUS," the executive says.

During the Asian financial crisis of 1997/98, UEM was roped in to help parent company Renong that came under some heavy selling pressure.

Funds were selling Renong because it was the ultimate holding company to the group that had an estimated total debt of some RM20bil.

The group of companies under UEM were mobilised to absorb Renong shares that were sold down in the market.

A collapse of Renong was something that could not had happenned because it would have triggered a cross default of all the loans within the group.

But the shares held by the individual companies within the group had to finally find a safe house with plenty of cash. That safe house was UEM.

In October 1997, UEM emerged as the purchaser of a block of 32% in Renong, a transaction that did not go down well with investors.

It caused share prices of the entire group of companies to collapse because UEM was seen as being used to save Renong.

Subsequently, Halim gave an undertaking in 1998 to buy back the 32% by February 2001. It cost him RM3.2bil.

The latest offer for PLUS has got the political masters re-thinking, not to mention adding on the pressure on UEM and EPF.

The latest offer for PLUS has got the political masters re-thinking, not to mention adding on the pressure on UEM and EPF.

But Halim claimed that he was never allowed to fulfil his obligation to buy back the 32% block.

He also has contended that in 2001, he was told to hand over his interest in Renong to Khazanah Nasional Bhd to facilitate a takeover by the national sovereign fund.

Tan Sri Nor Mohamed Yakcop, the former Finance Minister 2 was the architect of the takeover and he had the blessing of the then Prime Minister Tun Dr Mahathir Mohamad.

In April last year, Halim came out publicly to state that he was forced to hand over the shares in Renong and was not paid for his equity. He filed a suit against Khazanah, the Government and Nor Mohamed.

The High Court dismissed the suit but he is appealing.

In the documents supporting his suit, Halim had contended that the Renong Group had assets that were worth more than its liabilities.

He felt that if the Government had allowed him to list PLUS or sell a portion, the group would have been able to clear all its debts.

"Halim always knew ways to monetise the PLUS highway. Even at the height of the crisis, he prided that the highways were cash-cows and worth more than the debts of the group," says the executive.

When he had to give up the highways, Halim did not command the confidence of the political leaders and the market then. However his latest offer has got the political masters re-thinking, not to mention adding on the pressure on UEM and EPF.

Mystery exit at Bursa

Posted: 28 Mar 2014 09:00 AM PDT

AFTER its AGM on Thursday, Bursa Malaysia is without a chairman for its audit committee. How it came to this is a bit of a puzzle.

The previous audit committee chairman, Tan Sri Abdul Samad Alias, 71, retired as an independent director after some shareholders had voted against his reappointment.

The Companies Act stipulates that a person aged 70 and above can be a company director only if supported by at least 75% of the votes at an AGM.

For the so-called Resolution 9 to reappoint Abdul Samad, the dissenting votes accounted for nearly 29% of the shares held by those attending the meeting. That's 75.6 million shares, which is equivalent to 14.2% of the company's paid-up capital as at December.

Bursa Malaysia's two largest shareholders are the Capital Market Development Fund (CMDF) and Minister of Finance Inc. The former's stake is close to 19% and the latter has 16%.

It's safe to assume that neither of them rejected Resolution 9. If they had, there would've been a lot more nay votes.

Besides, any move to bring somebody new to the Bursa Malaysia board or to retain an existing director, requires the concurrence of the Securities Commission. According to Bursa Malaysia, the regulator had no problems with Abdul Samad returning to the board.

Bear in mind that the CMDF was established under the purview of the SC, and the Finance Minister appoints the CMDF directors.

The latest filing shows that Bursa Malaysia's third largest shareholder, the Employees Provident Fund (EPF), had 45.7 million shares (8.6%) as at March 24. Had the EPF voted against Resolution 9?

Not if you go by the EPF's Corporate Governance Principles and Voting Guidelines.

The EPF says it will vote against the re-election of a director in circumstances such as when he has less than 50% attendance of board and audit committee meetings, or has performed his duties poorly. None of this seems to apply in Abdul Samad's case.

Although the EPF is generally lukewarm about the retention of directors above 70, its policy is to abstain from voting. Also, Bursa Malaysia chairman Tun Mohamed Dzaiddin Abdullah, 76, faced a similar vote on his reappointment and yet, he got through with a 90.5% majority.

And so, the investing public remains in the dark about why Bursa Malaysia has lost its audit committee chairman. Can somebody step forward with an explanation?

Khalid caught off guard

Posted: 28 Mar 2014 09:00 AM PDT

Selangor Mentri Besar Tan Sri Khalid Ibrahim has always prided himself on being one up on the state's previous administrators because of his background as an investment banker.

He has time and again said that his experience in the corporate world has been useful in dealing with developers wanting a piece of the action in the abundant land held by the state.

However, a deal that the state had entered into with Tropicana Corp Bhd in April last year has caught the mentri besar flat-footed.

Under the transaction, Tropicana acquired 1,172 acres from the state for RM1.3bil to be paid over 20 years as the land is being developed.

Under the terms of payment, Tropicana had to fork out RM50mil as deposit and make two advance payments over a period of six months. The remaining is to be paid with interest over various schedules stretching over 18 years.

However, what Tropicana has done is carve out a portion of the land to Eco World Development Group Bhd for a cash payment of RM470.57mil.

This has got the state all riled up because Tropicana has been able to monetise the deal faster that it had envisaged. Now Khalid is seeking an accelerated payment schedule for the land.

He wants RM844.2mil, which in the state's opinion is the present value of the land.

But whether he gets it or not is something for Tropicana to decide. This is because the agreement does not restrict Tropicana from disposing a portion of the land to reduce the cost of holding it.

Khalid has played his cards well in the consolidation of the water assets in the state so far. He has also got the state better deals in many of the land transactions.

But he appears to be side-footed in this particular transaction.

Kredit: www.thestar.com.my

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