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Asiaweek: Latest on Daim, Time and Renong
Just make yourself a dotcom
By ASSIF SHAMEEN
[Asiaweek] January 25, 2000
Web posted at 5:30 p.m. Hong Kong time, 4:30 a.m. EST
Have you been running a deeply indebted company
that has defaulted on its loans and is struggling to
stay out of liquidation? Have your bankers been
giving you sleepless nights? Have you been trying
to sell off assets to pay back loans and found no
one who'd give you even half your asking price?
Well, fret no longer because the Internet can set
you free! In fact, the Net can turn a poor ugly
duckling into a wealthy prince.
That's how it has seemed for Time Engineering,
one of Malaysia's most indebted listed companies.
Time Engineering is part of the Renong Group, one
of the country's best-connected companies, whose
shareholders have ties to Finance Minister Daim
Zainuddin and the leadership of dominant political
group, UMNO. As a group Renong has a total of
over 20 billion ringgit ($5.3 billion) in debts. Its
47%-owned affiliate Time Engineering alone is
saddled with nearly 5 billion ringgit ($1.31 billion)
in
debts. In 1998, Time Engineering posted a loss of
$605 million.
Last year's financial statements haven't been
audited yet, but analysts say the losses are likely
to be close to a hundred million. For 18 months
now, the company has been trying to do a debt
workout with bankers through the state-sponsored
Corporate Debt Restructuring Committee (CDRC).
The bankers and CDRC told Time to sell its assets
to repay debts, and for more than a year the
company has been trying to off-load its prized
possession, Time Telecom, a subsidiary that owns
a nationwide fiber-optic network as well as a small
cellular service network. Time Telecom's main
asset is its 3,600 km of fiber-optic trunk line laid
alongside toll roads that parent Renong built and
1,600 km of submarine fiber cable surrounding
peninsular Malaysia. Though fiber optics and
broadband may be the in-thing, Time's assets
haven't been much valued by the experts. Earlier
this month, Time Engingeering's investment
bankers, N.M. Rothschild & Sons Asia, advised it
to sell Time Telecom to Singapore Technologies
Group, who had participated an in open bidding
process. The highest bid was reportedly just over
$450 million. If Time Engineering had listened to its
bankers and sold, it would still have over $950
million in debts and not much else to offer. If this
happened, analysts reckon, Time Engineering's
creditors might get no more than 35 cents on the
dollar in a liquidation.
Then a week ago, Renong and Time Engineering
did a dramatic about-face. There would be no asset
sale. Renong boss Halim Saad (a protégé of Daim)
and his close cigar-aficionado buddy Abu Talib
Othman (who once served as Malaysia's attorney
general) appointed themselves, respectively, CEO
and chairman of Time Telecom. On Monday, Jan. 17,
the company changed its name to TimedotCom announced
it would be an Internet player and said that
TimedotCom
would be listed. Where? The company didn't say, but
rumors circulating in Kuala Lumpur have it that the
highly indebted TimedotCom (previously known as Time
Telecom) will be listed on NASDAQ.
Needless to say, the share prices of Time Engineering
and its ultimate parent Renong have soared. Time
Engineering's stock is one of the most heavily traded
in recent memory in Malaysia, more than doubling in
the past 10 days. Renong shares are up nearly 40%.
Halim, who is so shy that he normally walks away when
he sees a journalist, has started giving lengthy
interviews for the first time in his 18-year business
career. TimedotCom has run an aggressive marketing
and advertising blitz, touting itself as a major
potential Internet play even though it does not yet
have any operational Internet businesses to speak of.
One ad says: "With its own unique potential
[TimedotCom's]
ballpark valuation is 14.69 billion" ringgit.
That's $3.87 billion -- amazingly unique potential
for a company whose investment bankers only last week
advised a sale for a small fraction of that.
Halim has been telling analysts and bankers that Time
has worked out a multipronged strategy to get out of
trouble and harvest the fruits of the Internet.
It would list TimedotCom, raising about 1.5 billion
ringgit ($400 million) from its IPO. It would then
issue new shares in three separate telecom units to
its creditors as part of a debt-for-equity swap, which
would retire a substantial portion of the debt.
Every day for the past week, there has been a new
wrinkle added to TimedotCom story. It might merge
with private station TV3. It might be join with the
New Straits Times publishing group. It might acquire
both NST, TV3 and the government-affiliated Internet
Service Provider Jaring in an AOL-Time Warner kind
of deal. TimedotCom's PR machine is churning out
press releases daily. Its number of phone subscribers
can easily double this year, says one. TimedotCom
can notch up 400,000 Internet subscribers this year
when it launches its own Internet service provider,
says another. It could spearhead mega-mergers
involving
all major government-affiliated telecom, Internet,
software and related companies goes yet another. And
TimedotCom could be the next (take your pick) Softbank
or Pacific Century CyberWorks. Even in the overhyped
world of Internet plays, the mania surrounding
TimedotCom is overthe top.
But really, it's much ado about nothing. Remember,
TimedotCom is just a new name for Time Telecom. The
Internet business hasn't yet started. The debts are
still there. Nothing has changed. Except the name,
of course.
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