[Keranamu Renong satu bank padam sekelip mata.... kini Daim dan Halim pula tenggelam walaupun mungkin timbul semula. Tetapi tiada sesiapa pun masuk penjara walaupun mencuri di siang hari atau sebuah bank sudah dilingkupkan olehnya kerana Mahathir pun sama sahaja. - Editor]

http://www.iht.com/articles/26793.htm

Malaysia Plans to Take Control of Indebted Renong

Bloomberg News

Friday, July 20, 2001

KUALA LUMPUR The government said Thursday it would wrest control of Renong Bhd., the biggest and most indebted Malaysian industrial group, from the financier Halim Saad in an effort to lift investor confidence in the economy.

The move is aimed at dealing with the country's more than $8.7 billion of overdue corporate debt, a burden that is weighing on the economy's prospects as Malaysia tries to ride out the effects of a global economic slowdown.

The government, with help from the state asset management agency Pengurusan Danaharta Nasional Bhd., said it would take over United Engineers Malaysia Bhd., or UEM, which owns 32.6 percent of Renong. The government may then reorganize Renong, which has interests in construction, property, hotels, oil and gas, toll roads and banking.

The move is a setback for Prime Minister Mahathir bin Mohamad's efforts to let private companies manage key projects, a policy he crafted to help ethnic Malays. Ethnic Chinese have long dominated many of the country's key businesses.

Still, investors said the move signaled that the government was stepping up efforts to work through bad debt, a vestige of the 1997 Asian financial crisis that has been a drag on the economy.

"It's about time," said Philip Tan, a fund manager at MBF Unit Trust Management Bhd. "Who else but the government," he asked, can help restructure Renong's debts.

The potential reorganization at Renong, which has 20 billion ringgit ($5.26 billion ) in debt, and optimism that other corporate restructurings may follow have lifted Malaysian stocks. Kuala Lumpur's key stock index has gained 6.9 percent in a week, although trading in Renong and UEM was halted Monday pending announcement of the plan.

The state news agency Bernama quoted Mr. Mahathir as saying that a delisting of Renong shares might help lift the stock market, adding that such a move was in the public interest.

The government's action may reduce the influence of businessmen connected to Daim Zainuddin, the former finance minister who quit in June. Mr. Halim, who was not immediately available for comment, is a Malay businessman groomed by Mr. Daim at Peremba Sdn., a property developer.

The state-owned institutions that may take over UEM include Permodalan Nasional Bhd., the biggest fund manager, or Khazanah Nasional Bhd., an investment arm of the government.

Sheriff Kassim, managing director of Khazanah, declined to comment. Permodalan's chairman, Ahmad Sarji, said he had not been informed of the plan.

The Asian Wall Street Journal reported that the government planned to spend 2 billion ringgit to take control of Renong. Renong was formed in 1989 by pooling many of the interests of the ruling United Malay National Organization party. The company enjoyed the pick of government contracts and had access to almost unlimited credit. UEM won a contract to build and operate the country's biggest toll road, which now snakes across peninsular Malaysia. It built a second crossing between Malaysia and Singapore and owns the only expressway that links Malaysia's new airport in Sepang and the capital.

The government's move to take control of the group came just days after Mr. Halim delayed for a second time repayment of part of 3.2 billion ringgit owed to UEM as part of payment for a 32 percent stake in Renong he agreed in 1998 to buy at a later date.

That deal was meant to appease UEM investors upset by UEM's acquisition in 1997 of a 32 percent stake in Renong, which they saw as a bailout of Mr. Halim and his associates.

http://business-times.asia1.com.sg/ news/story/0,2276,15174,00.html?

July 20, 2001

Dr M blames Renong for stock market's woes

From Eddie Toh
in Kuala Lumpur

MALAYSIAN Prime Minister Mahathir Mohamad has blamed beleaguered tycoon Halim Saad's Renong group for dragging down the entire stock market.

The prime minister told local media yesterday that the financial woes at the conglomerate weighed heavily on the stock market.

He said that if the counter were to be removed from the stock market, 'it might do something to help the Kuala Lumpur Stock Exchange'.

The premier yesterday appeared to be less than sympathetic towards Mr Halim, a close associate of former finance minister Daim Zainuddin, who was picked in the late 1980s to help spearhead the government effort to promote a clutch of bumiputra businessmen.

When asked if the government would take over Renong, Dr Mahathir said anything was possible but he did not want to reveal details of the restructuring exercise.

'If people want to do something about this, then go ahead. If it is profitable to the government, seronok juga (it's exciting),' he said.

With the new-found government zeal to speed up corporate reforms in Malaysia, an associate of Mr Halim said the boyish-looking businessman is not likely to survive his biggest corporate battle.

He may face the prospect of bankruptcy if he could not fend off the hostile government bid to wrest control of Renong and associate United Engineers Malaysia from him.

Merchant bankers said the government, if it succeeds in its bid to take over the group, may have to write off UEM's debts of over RM3 billion (S$1.4 billion) due from Mr Halim. But the government will have to seek the money from Mr Halim first before it could write off the debts. 'UEM must start on a clean slate but Halim has not been able to come up with that kind of cash,' said a merchant banker.

National bad debt agency Pengurusan Danaharta Nasional yesterday confirmed earlier reports that it will assist a government agency in taking over UEM. Danaharta managing director Azman Yahya will help restructure the group but will not head either UEM or Renong, a Danaharta official said.

A Dow Jones report said that finance executives, however, told The Asian Wall Street Journal that Mr Azman, who recently completed his three-year assignment as managing director of Danaharta, will be appointed chairman of the country's Corporate Debt Restructuring Committee, or CDRC, a position from which he will supervise the planned takeover of the Renong Group.

Danaharta declined to reveal the government agency involved but BT had identified it as Khazanah Nasional, which is headed by Dr Mahathir. A source said the government is determined to rebuild the tattered image of the Malaysian market, exacerbated by Mr Halim's corporate manoeuvres over the years.

Apart from irking minority shareholders in several deals, Mr Halim has yet to fulfil his put option agreement to buy 32.3 per cent of Renong shares from UEM. 'We have to send out the right signal,' the government source added.

But it will be bad news to Mr Halim, who once was a trustee for the assets of the dominant political party United Malays National Organisation. His fortunes took off in the late 1980s when the then ailing UEM was awarded the contract to build and operate the toll highway along the Malaysian peninsula.

Since then, his group has undertaken many national projects, including the second bridge linking Malaysia and Singapore, construction jobs for the Commonwealth Games in 1997 and a driverless monorail system in KL.

However, the 1997-98 Asian crisis took a heavy toll on the group, which had chalked up some RM20 billion in debts.