20100223 1003 Malaysia Corporate News.

Astro All Asia Networks has won its case against Lippo Group for a failed Indonesian pay-TV venture.The Singapore International Arbitration Centre (SIAC) has ruled in favour of Astro to recover US$230m (RM787m) from the Lippo Group over a failed Indonesian pay-TV venture.

• Astro has sought to recover the value of support and services it provided to PT Direct Vision from Mar05-Oct08. PT Direct Vision, a joint venture between Astro and Lippo Group, managed the now-defunct Astro pay-television service in Indonesia. 
• SIAC's ruling states that PT Direct Vision is liable for US$230m and PT First Media Tbk and PT Ayunda Prima Mitra are jointly and severally liable with PT Direct Vision for US$95m. The $230m award is 87% of the compensation sought by Astro. (BT, Financial Daily) This is a positive surprise to us and the market. The RM787m awarded works out to be RM0.41/share. However, we believe the recovery of the awarded amount will be protracted.

EON Capital has postponed a special shareholder meeting yesterday after about 6% of the owners cannot vote on the resolutions due to technical matters. The meeting is adjourned to 15 Mar. "The shareholders have agreed to adjourn the extraordinary general meeting (EGM) upon recommendation of the requisitionist based on some technical irregularities," K&N Kenanga Holdings' group director Tengku Zafrul Aziz said. K&N is the corporate adviser for several EONCap shareholders, including businessman Rin Kei Mei, who has called for the meeting to add eight new directors to the board.

• EONCap's current board recently shot down a takeover bid by bigger rival Hong Leong Bank Bhd, prompting Rin, who is keen to sell his 15.4%, to plot a change in the board composition. The move would ultimately pave way for Hong Leong's proposal to be reconsidered. 
• "Slightly more than 6% of the shareholders have made the chairman their proxy, but under Companies Act, a proxy has to be either a shareholder, a practising lawyer, or an approved company auditor," Tengku Zafrul said. EONCap chairman Tan Sri Syed Anwar Jamalullail is neither a lawyer nor company auditor, and he does not own shares in the company, which means he is not a qualified proxy and thus cannot vote in the meeting.
• It was an oversight on the part of Syed Anwar and the shareholders who made him a proxy, but Rin has agreed to postpone the meeting on the ground that all shareholders are able to vote on the resolutions. (BT)

Malaysia may see weak palm oil production growth for a second straight year and miss government output target as yields suffer due to the current hot weather, estate owners said.

• Hotter-than-usual weather, due to the resurgent El Nino weather condition, has aggravated the biological stress that oil palms are experiencing after seasonally higher production in the last quarter of 2009, they said. Biological tree stress refers to weaker yields after a period of high productivity. 
• Estate owners in mainland Malaysia and states on Borneo island say the dry spell could now extend Malaysia's low palm oil production period seen in the first quarter of this year to June and lift prices of the vegetable oil.
• The dry weather in February will also stunt the development of oil-rich palm flowers that take about six months to mature and produce fresh fruit bunches during the peak production period in the fourth quarter, they explained. ' 
• We are unlikely to hit the government's forecast of an additional 500,000 tonnes of palm oil if the hot weather continues to persist,' said a plantation owner with holdings in Malaysia and Indonesia. Palm oil estates in mainland Malaysia and the top producing state Sabah on Borneo island are dependent on surface water sources for irrigation. (Reuters)

A planned new palm oil futures contract in Indonesia, faces an uphill struggle against an established Malaysian rival and the imminent launch of a US competitor. The Indonesia Commodity & Derivative Exchange (ICDX) aims to launch the contract in April, but is chasing trading volumes of more than four million lots a month on Bursa Malaysia, the stock exchange in its neighbour.

• The move is the second attempt to create an Indonesian benchmark price, providing a better reflection of local supply and demand, and eliminating currency risk. But clouding the new exchange's prospects is a plan by the world's largest derivatives exchange, CME Group Inc, to develop a US dollar palm oil contract based on Malaysia's ringgit contracts for trade on its Globex platform. 
• The absence of regular data from Indonesia and most users' preference for Malaysia's pricing benchmark will also make it tougher for the Indonesian contract to gain a toehold. (SBT)

CPO futures on Bursa Malaysia Derivatives closed firmer yesterday, bolstered by rising crude oil and soy prices. A dealer said the expected lower production due to the hot weather, was likely to further boost market sentiment. The palm price was expected to reach around RM2,700 this week, he added.

• Cargo surveyor Societe Generale de Surveillance reported that Malaysian palm oil exports for the Feb 1-22 period slipped 8.4% to 865,593 tonnes from 945,311 tonnes in the first 20 days of January. (BT)

PPB Group’s 4Q09 results announcement will be delayed, as it waits for 18.4%-owned Singapore-based Wilmar International to announce its results. Wilmar told the Singapore Exchange it will announce its full-year results on March 1. PPB targets to release its 4Q report to Bursa Malaysia the day after i.e. on March 2. (BT)

The Science, Technology and Innovation Ministry is looking into awarding incentives to those who venture into "green" electricity generation, said minister Datuk Seri Dr Maximus Ongkili. "Supporting packages from related agencies also need to be streamlined to spur innovation in the green energy field. This will help boost the waste to wealth industry," he added. (Bernama)

Maxis is looking to raise a syndicated term loan facility of USD750m and term loan facility of RM2.5bn to pay amounts owing to Maxis Communications Bhd. (Bursa Malaysia)

Local Islamic banks need to innovate more to remain competitive within the industry following the government's move to liberalise the financial services sector. "I think it is a question of survival for competitors.

• Local players need to buck up and innovative more to effectively compete. "With foreign banks stating an interest in moving to Malaysia, it is essential that they do this to move ahead," said Bank Islam MD, Datuk Seri Zukri Samat. (Bernama)

The improved market situation and consumer sentiment and the launch of several new models pushed vehicle sales in Jan-2010 to 50,622 units, up 33% yoy. The Malaysian Automotive Association (MAA) said sales volume improved 6% mom.

• "Of the total units sold, 45,973 units were passenger vehicles and 4,649 commercial vehicles," it said. Sales volume, however, was expected to be lower in Feb due to seasonal shorter working month due to the Chinese New Year holidays and company closures. (Bernama)

Mah Sing is projecting RM1bn sales this year. The company believes the property market is improving, reflected by stronger sales, better consumer sentiment and business conditions as well as rising household loan applications and approvals. Mah Sing will continue to aggressively introduce its property projects this year.

• It also targets to launch its first overseas project in Wujin, China, this year. Meanwhile, the developer also announced the acquisition of 6.32 acres of land in Cyberjaya for RM21.7m from Cyberview Sdn Bhd. (BT)

Property developer Ibraco is buying a piece of land measuring 15.69ha in Kuching, Sarawak, for RM22m. Approvals have been obtained for various development with an estimated GDV of RM404.7m. (BT)

The proposed acquisition of KNM Group Bhd’s assets will funded by a close to 50:50 debt to equity ratio, worth a total of RM4.3bn, with Goldman Sachs investment banking division providing the bulk of the lending, sources said.

• The debt portion of the deal is believed to include a refinancing of all of KNM’s existing group debt. The equity portion will be taken up by three parties – Goldman Sachs private equity (GS Capital Partners VI Fund), Mettiz Capital Ltd and Lee Swee Eng. 
• Lee is KNM MD and major shareholder and is participating in the deal through his vehicle, BlueFire Capital Group. Mettiz Capital is a company incorporated in the British Virgin Islands and is an investment vehicle of one Michael Tang Vee Mun.
• It is understood that the debt portion will be at a ratio of 4x-5x earnings before interest, tax, depreciation and amortisation (EBITDA) of KNM. “For any acquirer to maximise return on its investment, he would want to borrow as much as possible and current market conditions should support around 4x-5x EBITDA,” the source said. (Starbiz)

General insurer Overseas Assurance Corp (M) Bhd (OAC Malaysia), the local general insurance arm of the Great Eastern Holdings group, will start talks to buy the general insurance business of Tahan Insurance Malaysia. Tahan said this followed the closure of its tender exercise and that the final terms and conditions of the sale are subject to approval from relevant authorities. (BT)