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Asiaweek: Restructuring or a Reshuffling?
By Arjuna Ranawana
15/6/2001 11:42 pm Fri
[Syarikat Vincent Tan sering bertukar nama kerana tidak berjaya
walaupun dulunya kelihatan Berjaya. Beliau sebenarnya bukannya pakar
berniaga tetapi pakar bermain bawah meja mengunakan orang tertentu
dipuncak kuasa. Apabila gagal dia akan beredar dan cabut dengan
selamba. Banyak projek yang diceburinya mendatangkan masalah yang
semakin melanda-landa seperti IWK, Monorel dan mungkin juga Times
Square (dulunya Berjaya Square). Projeknya telah mencetuskan
ketidak-puasan pengguna, boikot kontraktor dan krisis yang kronik
sehingga akhirnya tersadai begitu sahaja. Kerapkali kerajaan datang
menyelamatkannya juga melalui pelbagai cara, samada secara terang
atau pun sembunyi. Kadang-kadang beberapa angka dipermainkan untk
menipu tetapi ia terbongkar jua. Yang peliknya mengapa kerajaan masih
sayang kepadanya sedangkan dia asyik menimbulkan masalah sahaja?
Tidakkah ini bermakna orang tertentu dipuncak kuasa mendapat sesuatu
darinya? Tiket kapalterbang dan tempat percutian yang nyaman itu sudah
lama tersedia di luar negara buat sesiapa yang mampu diperkuda. Kalau
bekas hakim negara yang arif pun kena, apakah orang lain yang kurang
arif pun tidak terkena?
Restructuring or a Reshuffling?
The fortunes of Berjaya, one of Malaysia's leading conglomerates, are
closely tied to the weakened economy
By ARJUNA RANAWANA
In happier times, a Malaysian corporate restructuring including the
injection of a $450 million asset like the Times Square high-rise in
downtown Kuala Lumpur might be welcomed by investors. Not now. Tycoon
Vincent Tan recently announced he will try to reverse the crumbling
fortunes of his Berjaya Group by creating a new company that will
include most of the old company's assets and a few new ones, too, like
Times Square. But with the city in the throes of a property glut and
unfinished Times Square saddled with around $150 million of debt, in
the first four trading days after the news was announced investors
knocked down Berjaya's share price 26%.
Like acquisitive conglomerates the world over, Berjaya has always
relied on strong revenue growth to service its debt. When the
Malaysian economy slowed after the 1997 economic crisis, the company
assumed that growth would quickly return. But the recovery sputtered,
and now Berjaya - with interests in retail, real estate, financial
services and gaming properties - must face up to the fact that in this
economic environment its debts could quickly get out of hand.
Malaysia's GDP has been falling ever since it topped out at a rate of
11.7% in the second quarter last year. Growth in the first three
months of 2001 was 3.2%. Bankruptcies are up, nonperforming loans are
on the rise and consumer confidence is plummeting.
Berjaya has been taking on water for the past two years and has not
shown any ability to rise above economic adversity. The company lost
almost $80 million in the first nine months of its fiscal year to the
end of January 2001, the most recent period it has reported. Berjaya
has about 100 operational units employing more than 22,000 people.
Since its inception in 1984 as a maker of Raleigh bicycles, the
company has grown to have annual sales of $2 billion and operations in
more than 10 countries.
The immediate goal of the restructuring, which still must obtain
regulatory and shareholder approval, is to reduce some of the
company's $1 billion debt. An as yet unnamed firm - for now, company
officials call it "Newco" - will essentially replace the Berjaya Group
as the company's listed vehicle. Besides owning Times Square, the new
entity will differ from Berjaya in that it will buy 24% of another Tan
asset, mobile-phone operator Digi.com, which is Malaysia's
third-biggest mobile-phone company in a field of five.
Digi.com is a solid company, but the Times Square development is the
joker in the deck. The ambitious, mixed-use development will open next
year, and a real estate glut could mean high vacacancy rates or low
rents. But Berjaya Group executive director Freddie Pang Hock Cheng
insists the project will be a winner: "The depth and breadth of
activities at Times Square will be more than any other place. Everyone
will want to go there."
In return for the cash and assets he plans to inject into the new
listing, Tan's holding in Berjaya would increase to 66% from his
current 34% stake. Pang says the hope is that the additional assets
will help boost the value of the stock, allowing Berjaya to swap
shares for part of its debt. Minority shareholders will receive just
one share in the new firm for every four they hold of Berjaya. But
Pang says that with the stock down to M$0.20 (5 cents), things could
hardly get worse for shareholders: "The markets have already given
[them] more than a haircut."
And given the current political environment in which the government is
hypersensitive to accusations that it is helping cronies at the
expense of the public, there is little hope of a government bailout.
Berjaya investors are stuck with Tan's plan, and, as ever, he remains
optimistic. Pang says the tycoon expects to achieve a turnaround for
the group by 2003. Says Stephen Hagger of CFSB Research in Kuala
Lumpur: "You never know. He may pull it off."