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Asiaweek: Halim Saad quits UE(M)
By Arjuna Ranawana

9/7/2001 8:19 am Mon

[Rakyat Malaysia jangan tertipu dengan perubahan mendadak sektor koporat di negara ini kerana ia cuma silapmata untuk menagbui mata. Bukankah dana orang tua yang dikebas dan diperjudikan itu tidakpun dipulangkan semula? Lagipun tiada sesiapa pun didenda. Demikianlah istimewanya hidup sang kroniputra.... berhutang berbilion pun masih dilayan bagai si anak raja.

Jangan harap Mahathir akan mengejar Halim ke mahkamah kerana Mahathir sendiri merestui segala-galanya - termasuk tindakkan Daim juga.
- Editor


July 13, 2001

Halim Saad quits UE(M)

The tycoon's struggle to hang on to his empire

What's happened?

Malaysian tycoon Halim Saad, 47, head of the infrastructure group Renong, has resigned as executive vice chairman of United Engineers (Malaysia). UE(M), which operates the lucrative North-South Expressway, is a subsidiary of Renong.

Why did he do that?

No reason has been given, but it is probably to avoid a conflict of interest. Three years ago, as part of a move to reduce Renong's debts, UE(M) bought a 32.6% stake in its parent. Halim promised to buy this block of shares back for $842 million by February this year. But when the time came, the UE(M) board, which he belonged to, granted him a stay of execution. On July 14, Halim has to pay $26 million as an interest payment on this sum, but he has again asked for more time.

So how does his resignation help his case?

It allows the UE(M) board to consider his request without his presence in the room. This appearance of probity will likely forestall any legal action by minority shareholders to recover the money.

Will he get government help?

Probably not. With government rescues being criticized by both ruling party members and oppositionists, bailouts are now politically incorrect.

Does this mean bye-bye Halim?

Not yet. Thanks to his complex maneuvers, much of Renong's huge debt has been restructured. Despite the new political realities, Halim is doing his best to hang on.


UEM delisting speculation surrounds Malaysia's Halim

By Wong Choon Mei

KUALA LUMPUR (Reuters) - A week before a much-watched instalment on a 3.2 billion ringgit ($842 million) debt falls due, speculation persists that tycoon Halim Saad may avoid repaying it by taking Malaysia's top construction firm private.

Halim won United Engineers (UEM) some of Malaysia's best infrastructure deals during the booming 1990s, but last week resigned his 16-year long vice-chairmanship without giving any reasons.

That revived talk Halim, who owes the money to UEM from a controversial share deal struck during the Asian financial crisis to tide over stablemate Renong Bhd , may seek to delist UEM -- in which he already has a 38 percent stake.

"If UEM is delisted, it won't fall under the purview of the market watchdogs," said Rudie Chan of ING Barings. "Any loan between him and UEM becomes a private matter."

Halim quit UEM at the end of June, within a month of his mentor Daim Zainuddin's resignation as Finance Minister.

The young Malay tycoon was in his mid-thirties when he was appointed executive chairman of Renong in 1990 -- at the end of Daim's first stint as finance minister. Companies formerly controlled by the ruling United Malays National Organisation where brought together under Renong that year.

UEM issued two denials in two days at the end of June that there were any talks with Halim to take the company private, but talk that cash-strapped Halim will still play this joker persisted.

Although given an extra 15 months and staggered terms to repay his debt, which originally fell due in February, Halim has asked for more time to settle a 100 million ringgit ($26 million) instalment due on July 14.

UEM, which appointed international consultancy Arthur D. Little to advise the company on strategy and restructuring after Halim's resignation, has yet to answer the plea for extra time.

The share gained 2.4 percent to 2.97 ringgit on Friday, aided in part by a stronger overall market.

Halim has only to buy out the balance shareholding and the stock's battered price now affords him that opportunity.

Analysts reckon that taking UEM private could cost Halim between 1.5 to 2.0 billion ringgit, still lower than the 3.2 he has to otherwise settle by May 2002.

He may have to pay a lot more, as UEM's share is trading at a deep discount to its fair value of around 7.50 ringgit.

"To buy in block from the other shareholders, he may have to stump up a premium of up to 50 percent from current prices. Even so, it's cheaper," said Mak Hoy Kit of KAF Seagroatt & Campbell.


But UEM, which holds the cream of Malaysia's lucrative network of highway toll concessions, may be too valuable an asset to let fall into the hands of any one individual.

"UEM has through the years accumulated vast strategic assets, mainly from government contracts. In turn, it is expected to play a key role in the country's development," said an analyst at a local brokerage. "It doesn't make sense to let it go to one man."

Such an event could trigger another wave of unpopularity towards the government.

In March, public outrage spilled over -- causing trade unions to threaten a nationwide picket -- after two government pension funds were roped in to take up the undersubscribed shares of Halim's telecom firm, Time dotCom .

One of pension funds, KWAP, bought 10.82 percent of Time dotCom at the IPO price of 3.30 ringgit. It is estimated to be sitting on paper losses of some 275 million ringgit, as Time dotCom shares tumbled on debut.

"Some say UEM deserves to be delisted if Halim doesn't pay -- a sort of a victory for corporate governance," said Mak. "But there are wider implications than that."

Mustering up enough money may be another factor that could hinder Halim from taking UEM private.

"Delisting may be the cheaper answer but the question remains the same, where is he going to get the money," said Chan.

For now, analysts remain divided over how Halim will resolve his problem. They say the worst case scenario -- an outright default -- has already been priced in.