In my DESIDERATA comments, I thought aloud if there would be some hurdles in the way of a JV by local company with a subsidiary of Bank of China in trying to take over PLUS. What I had in mind is a recall of a Time Engineering's takeover bid that was almost done by Singtel, but aborted at the last minute.
I "googled" and here's a good summary of that episode from (now defunct)
ASIAWEEK weekly magazine:
MAY 26, 2000 VOL. 26 NO. 20 | SEARCH ASIAWEEK
 |  Chan Looi Tat for Asiaweek There is now talk that Time may yet merge with market leader Telekom Malaysia |
That is one message in Kuala Lumpur's restructuring of Timedotcom
By MARIA CHENG and ARJUNA RANAWANA
When is a deal not a deal? For those watching Asia's takeover-happy telecommunications sector, the answer may well be: when it's a deal with Singapore Telecom. Earlier this year, SingTel lost Hong Kong's main phone company, Cable & Wireless HKT, to entrepreneur Richard Li (No. 14 in the Asiaweek Power 50 - see page 49), even though Britain's Cable & Wireless had initially agreed to merge with SingTel. Now, the state-linked Singapore giant has seen its proposed investment in Malaysia's Time Engineering infrastructure group and its debt-ridden telecom unit, Timedotcom, fall through barely a month after it got the nod of Time's parent company, Renong.
In the battle for HKT, SingTel could not match the $38 billion in cash and stock that Li plunked down then (the deal's value has since dropped). However, for one-fifth of Timedotcom and 14.5% of Time Engineering the Singaporeans were willing to pay higher-than-market prices - a total of $579 million - without insisting on management control. No wonder Renong boss Halim Saad was quick to agree. But the dealmakers did not count on Malaysian politics, nationalism and feelings toward Singapore.
Soon after the SingTel-Time deal was announced in April, there were grumblings in the dominant United Malays National Organization about letting a Singapore government-linked corporation take a big chunk of a major telecom enterprise. When UMNO party polls came around in early May, an informed source said the word from "the top" - read Prime Minister Mahathir Mohamad - was that "a Malaysian solution would be preferred" for Time's financial woes. On May 12, Time called off the SingTel deal. Three days later, Malaysia's Khazanah state investment trust, chaired by Mahathir himself, began talks to buy up to 30% of Timedotcom, which has more than $1.3 billion in debt to restructure.
Foreign investors and market analysts watching all the toing and froing got pretty much the same message: Kuala Lumpur has a big KEEP OUT sign for foreigners eyeing key sectors. "The collapse of the SingTel-Time deal doesn't bode well for Malaysia," says Peter Millicom, a Lehman Brothers analyst in Hong Kong. "While the rest of the world is throwing its doors open, Malaysia is shutting them. While others are busy privatizing, Malaysia is effectively nationalizing Time."
"Commercial considerations were not paramount," fumes Lim Guan Eng of the opposition Democratic Action Party. "Emotional and nationalistic factors were important. This has an impact on the attractiveness of Malaysia to investors." The head of a foreign brokerage house said his European clients were dismayed and wondered: "Why did [Malaysia] go so far as the brink of signing and then announce [the deal] was off?" Foreign investment, after all, is vital to telecommunications development; investors would have welcomed SingTel's entry.
"Already we are being criticized for not restructuring properly," says Lim. "This adds to that." Indeed, in the aftermath of the Asian crisis, Malaysia Inc. is seen as having used connections and state funds to avoid drastic restructuring and management changes. The nation's refusal to sell distressed companies - so-called "national treasures" - to foreign buyers suggests that Kuala Lumpur lacks the will to force necessary, though painful, business decisions.
For his part, Mahathir said of the SingTel no-deal: "We are not against anybody." But around the time of the UMNO polls, deputy finance minister Shafie Mohamed Salleh told Parliament that nationalism had to be considered in the sale of Time Engineering. After all, the company, which built and operates Peninsular Malaysia's North-South Expressway, is 46.8%-owned by Renong, which is in turn tied to UMNO. The Timedotcom subsidiary, formerly Time Telecom, boasts an estimated 5,200 km of fiber-optic cables laid alongside Time's highway projects. It is now rolling out the country's second fixed-line phone network, for which it is licensed until 2018.
To let a major Singapore state-linked company into such a valued enterprise proved disconcerting to Malays, to say the least. It didn't help SingTel's case that when its deal hit the headlines, the share price of Telekom Malaysia, the state-controlled main phone company, plummeted. Analysts and investors had expected the Singapore tie-up to enable Timedotcom to pose serious competition to the market leader. Telekom's fall also dragged down the Kuala Lumpur Stock Exchange - right in the week of UMNO's elections.
Further complicating the politics was the role played by Mahathir's long-time associate, Finance Minister and UMNO treasurer Daim Zainuddin. Halim Saad is a protégé of Daim's, and throughout the negotiations with SingTel, Halim was to have briefed the finance czar, who was then expected to have kept the PM in the loop. Evidently, crucial bits of that communications chain broke down. Indeed, to others, the failed deal stirred up more talk of a rupture between Mahathir and Daim.
For one thing, SingTel's entry was opposed by Shamsuddin Kadir, one of the few top tycoons who, being close to Mahathir, can afford to displease Daim. Shamsuddin is chairman of Sapura Holdings, one of Timedotcom's big creditors, which made an offer for 40% of the telecom unit. When Halim refused, Sapura lobbied Timedotcom's creditors to oppose the restructuring of its debt if SingTel got in. Daim is said to be so incensed at Sapura's meddling that he maneuvered to keep it out of Time by bringing in Khazanah.
Those who see Mahathir and Daim falling out also note that the PM made two major appointments that seem to undercut Daim's economic clout -just a day before the SingTel deal fell through. The PM named a new economic adviser for himself and another for the Finance Ministry. Morever, seasoned observers note that Daim and Mahathir had differed on another restructuring exercise last year. Daim wanted to consolidate the financial sector into six anchor banks, but Mahathir decided there should be 10, after lobbying by some institutions slated for merger.
"There may not be a real rift," says a close source, "but taken together, the signals are hard to ignore." While dismissing speculation, Mahathir allowed: "Once the economy is turned around and brought to the usual old pace, I think he [Daim] may want to resign. That was the condition when he came into the government."
So what's next? As far as Time is concerned, Khazanah is in the final stages of talks to sell its 10%-15% stake in Telekom Malaysia to Japan's NTT. This deal, officials hope, will give the trust enough cash to solidify the Time rescue and restore foreign investor confidence. After all, Mahathir says the Khazanah tie-up "isn't a bailout." Timedotcom, meanwhile, needs a strategic partner that can provide expertise, technology and capital. Some speculate that NTT could be it, though its executives in K.L. know of no such plan. There is also talk of a Telekom-Timedotcom merger.
As for SingTel, one local fund manager thinks it is running out of targets: "Best bet might be India." Neil Juggins, a telecom analyst with Prudential-Bache in Singapore, sees the HKT and Time failures as "symptomatic of an inability to close deals. They must broaden their list to Europe and Australia." He also urges the state to sell down its stake, possibly to Deutsche Telecom, with whom SingTel has been talking "for years." Besides adding expertise, bringing in a foreign private company may help calm nations wary of a government-linked entity taking control of their telephones. Like Malaysia.
DESIDERATA: I will further comment later, InsyaAllah, on the past and present, wit' the Q ringing in my ears:
WILL MALAYSIAN CORPORATE HISTORY REPEAT ITSELF?
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UPDATEd on Monday Jan 10, 2011 with the help of a newspaper fromacross the causeway,can? ~~ YL, Desi
Stalemate likely with no new offers for PLUS
Published: 2011/01/10
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CURRENCY CONVERTER
The outcome that may not be entirely bad for UEM Group Bhd and the Employees Provident Fund as they still control the highway company.
Analysts believe that PLUS Expressways Bhd (5052) will remain status quo, with no new offer from its existing owners in sight and Jelas Ulung Sdn Bhd's bid once again put under scrutiny.
Three out of four analysts polled think a stalemate could be likely, an outcome that may not be entirely bad for UEM Group Bhd and the Employees Provident Fund as they still control the highway company.
PLUS is expected to make an announcement on the bids it received, after the market closes today.
It looks likely to only be between the two so far, despite rumours of a new bid by Asas Serba Sdn Bhd and another from Tan Sri Syed Mokhtar AlBukhary-controlled MMC Corp Bhd resurfacing.
UEM-EPF has offered to take over PLUS at RM4.60 per share that works out to RM23 billion, while Jelas Ulung offered RM26 billion or RM5.20 per share.
One analyst from ECM Libra, however, believes that it is still likely for UEM-EPF to come back with a revised offer in the ele-venth hour and therefore have its bid go through.
As at press time, however, no announcements to the effect were made to Bursa Malaysia.
With no revised offer from UEM-EPF and doubts on Jelas Ulung's financing capabilities raised, it looks likely that neither will be voted in by shareholders.
An article in Singapore Business Times, inspired by a blog, questioned Jelas Ulung's ability to gain regulatory approval for the foreign currency financing it needs, on concerns of its capability to service such a debt.
The depreciation of the ringgit appears to be at the crux of the argument, and whether Jelas Ulung would be able to cope with effects it would have on its ability to service the credit.
Read more: Stalemate likely with no new offers for PLUS http://www.btimes.com.my/articles/pbt1/Article/#ixzz1AcNl9UcA
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