[Kita simpan komen dulu tetapi cuba ikuti dan perhatikan nasib dan reaksi pelabur tempatan dalam kes ini. Besar kemungkinan golongan ini akan bertindak menghumban BN nanti kerana memijak mereka sesuka hati. Nampaknya reformasi mungkin akan mengandung, beranak dan menjalar ke sektor ini pula.... - Editor]

Malaysia in $1 billion all-or-nothing offer for UEM

By Wong Choon Mei

KUALA LUMPUR (Reuters) - The Malaysian government delivered a 3.72 billion ringgit take-it-or-leave-it offer on Monday to de-list United Engineers Malaysia in a first step toward salvaging the debt-ridden UEM-Renong group.

Analysts saw the $1.0 billion move as a first step to restructuring Malaysia's biggest corporate debtor and taking control away from controversial tycoon Halim Saad.

But the plan means losses and more angst for minority shareholders, who have complained their rights have been abused by Halim's efforts to shuffle debts within the group.

How the government handles the takeover is seen as a critical barometer of its readiness to confront the issues of corporate governance, pains of restructuring, and concerns over cronyism which have plagued investor perceptions of Malaysia.

With debts of 20 billion ringgit, analysts say restructuring requires a general sale of assets by the infrastructure group to investors with stronger hands and deeper pockets.

Syarikat Danasaham, a special purpose vehicle set up by government investment arm Khazanah Nasional Bhd for the deal, offered to buy out all shareholders at 4.50 ringgit a share and snap up warrants at 40 cents each.

"It is the intention of Danasaham to delist UEM... pursuant to the successful completion of the voluntary offer," Danasaham said in a statement.

It said the offer would lapse without acceptances of at least 90 percent, arguing full control was needed for restructuring.

"Under no circumstances will we increase the prices of our offer," Sherrif Kassim, a Khazanah board member and director of Danasaham, told a news conference.

AVOIDING BAIL-OUT ACCUSATIONS

Some analysts said the offer smacked of strong-arm tactics.

"Nobody expected the minimum acceptance level to be so high," said a research head at a local brokerage. "Minorities have to sell or face the whole situation returning to status quo, with UEM and Renong back to square one."

The deal values UEM shares 26 percent above their final traded price last Tuesday and at a 52 percent discount for warrants, which halted at 83 cents each. Trading in UEM and Renong is expected to resume on Tuesday.

UEM's crown jewel is the 848-km (530 mile) highway running the length of peninsular Malaysia that it owns and operates. Mobile phone network operator Time dotCom might be an early candidate for sale in any restructuring.

The offer, around 50 percent above UEM's three-month average, is nevertheless way below estimated fair value of over six ringgit. But offering more may have provoked accusations the government was bailing out Halim.

"This is taxpayers' money. If you pay too much some people will say it's a bail out," said a banker close to the deal.

Halim retains about 38 percent in UEM through Renong.

Instead, the government intends to appease ordinary Malays, or bumiputra, who have become disillusioned with the government's repeated support for a handful of tycoons.

"Khazanah intends to substantially pass on any benefits accruing from Danasaham to the Malaysian public especially the bumiputra community," said Sherrif.

POLITICALLY CONNECTED

The UEM-Renong combine, which racked up massive debts with the onset of the Asian economic crisis in 1997, has strong political ties.

The group was formed to bring firms formerly owned by Prime Minister Mahathir Mohamad's ruling United Malays National Organisation (UMNO) under one umbrella. Halim, a protege of ex-finance minister Daim Zainuddin, was brought in to run it.

Opposition politicians have already sought assurances the deal would not be a bail out for Halim or UMNO interests.

"What will happen to our economy if these big companies become bankrupt. This is not to bail out cronies," Mahathir told parliament on Monday.

Halim angered investors by his slowness to wield the restructuring knife and sell assets depreciated by the crisis and his days at the group appear numbered.

"Halim will have no role to play in the restructuring," Sheriff said.

Analysts said the market wanted improved operations and cashflow at the group, and reassurances about its debts -- notably the 3.2-billion ringgit Halim owes for a controversial share deal conducted in late 1997.

Khazanah officials say a decision on that debt will follow the takeover.