SITTING behind a small desk in a large room at the top floor of an office block in Mid Valley, 60-year-old Tan Sri Halim Saad is visibly disturbed when a company that he had once controlled, Renong Bhd, is compared to 1Malaysia Development Bhd (1MDB).
“I am concerned that articles like that (comparing 1MDB’s cash-flow problems to Renong) can affect my business negatively,” he says.
Halim, who is into the oil and gas business via Sumatec Resources Bhd , doesn’t mince his words when he contends that despite repeated explanations, the inaccurate picture of Renong/UEM Bhd continues to be presented.
“I want to correct the facts regarding Renong/UEM. Most of it is already in public domain and available from court documents,” he says.
Halim had headed Renong, which controlled UEM, until June 2001 when it was taken over by Khazanah Nasional Bhd on the grounds that the group had too much debt and posed a systemic risk to the banking system. Halim also had a put option amounting to RM2.3bil owing to the shareholders of UEM in relation to a block of Renong shares.
Before the takeover, Renong went through a restructuring in 1999 under the Corporate Debt Restructuring Committee (CDRC). As part of the restructuring, PLUS Expressways Bhd, which was a subsidiary of UEM then, had issued bonds to the tune of RM8.4bil. PLUS then lent the money to Renong and UEM to settle the creditors.
Halim has refuted allegations of the PLUS bonds creating any systemic risk, as they had been accorded a high rating by Rating Agency Malaysia Bhd.
In 2001, the Government instructed Khazanah to take over UEM, a move that effectively extinguished the put option.
Subsequently, Halim filed a suit against the Government, Khazanah and Tan Sri Nor Mohamed Yakcop, the adviser to Tun Dr Mahathir Mohamad in re-engineering corporate Malaysia after the 1998 Asian financial crisis. Halim is seeking a sum of RM1.6bil that he contends is due to him from the parties, following the takeover of Renong and UEM.
Distancing himself from 1MDB, Halim says it is wrong to compare the asset-rich Government fund that is facing cash-flow problems to Renong.
Halim says he never asked for help or a bailout from the Government, nor was there one.
“Despite what was reported, there never was any bailout. In 1999, the restructuring of Renong and the UEM group was done without any financial assistance from the Government and by the CDRC,” he says.
“I don’t have a copy of 1MDB’s annual report, so I cannot express an opinion on its performance or its financial position. I can only assume you have the accurate facts for you to express yours,” says Halim in response to a story that had appeared last week comparing 1MDB to Renong.
In the story, StarBizWeek had reported that 1MDB had debt obligations of RM40bil to meet in the next nine years, starting with the first payment of a US$975mil short-term loan due in August this year.
In the latest development, 1MDB announced that it had entered into an agreement with its partners from the Middle East that would see the fund receive US$1bil by June 4. This sum should help the fund meet its obligations with regards to the US$975mil loan.
Based on details from 1MDB’s annual reports and estimates from industry sources, it was reported that the fund had to pay RM5bil this year. Its annual interest and payment cost is estimated at RM1.4bil.
1MDB has assets in excess of RM51bil, but it is mostly in the form of land in Kuala Lumpur that cannot generate immediate cash flows. It has three power generation companies, but the bulk of the cash flow goes towards repayment of debts taken to buy the power plants.
In March this year, the Government extended 1MDB a standby credit facility of RM950mil to tide over its cash-flow problems.
StarBizWeek had reported that the situation of 1MDB was similar to Renong, whereby it is facing cash-flow problems due to long-term projects being financed with short-term loans, something that Halim disagrees with.
Halim says Renong had a lot of assets that had been sought after by others, citing companies such as Time Engineering Bhd, Bank of Commerce (now known as the CIMB Group ), the Penang Bridge, United Engineers and PLUS.
“Renong had the large piece of land in Johor that was half the size of Kuala Lumpur. That land is now Iskandar Malaysia. It is valuable. Singapore Telecommunications Ltd (SingTel) had offered RM2.1bil for a 20% stake in Time dotCom Bhd (TdC), but I was not allowed to sell,” says Halim.
In 2000, SingTel, which is controlled by the Singapore Government, had offered to buy a stake in TdC and its parent company, Time Engineering, a move that would have brought in cash to reduce debts.
But the-then Prime Minister, Tun Dr Mahathir, did not allow the sale. Eventually, TdC was listed, with Government funds being told to take up stakes in the listing.
“Government funds came in when TdC was listed because the SingTel deal was not allowed to go through,” he says.