20100329 1255 Malaysia Corporate News.

According to Gamuda Group MD Datuk Lin Yun Ling, Splash’s takeover proposal was also motivated by the unofficial/verbal takeover offer by PAAB on 18 March 2010 which was lower than the Selangor state government’s last offer. PAAB’s offer for Splash was, at most, half of the RM1.4bn equity value offered by the Selangor state government. Splash’s proposal addresses funding and pricing, the two main concerns that arose from the Selangor state government’s unsuccessful takeover offers. Splash plans to raise its paidup capital from RM400m to RM2.4bn via equity injection by its existing shareholders. With the large capital, banks would be willing to lend about RM8bn. The RM2.4bn would be more than enough to cover the risk of losses or cost overruns.

• Splash’s proposed water tariff hike is 2-3% p.a. or 9% every three years over the life of its proposed concession agreement (CA) of 30 years. This would give Splash a decent return on investment of around the mid-teens, which is better than for toll highways. Tariffs under Splash would be 35% below Syabas’ existing tariff. (Star, Edge Weekly)

In a telephone interview on his wish list of changes to improve the capital market, Bursa Malaysia’s CEO Datuk Seri Yusli Mohamed Yusof told Business Times that Malaysia’s stock exchange wants certain regulatory constraints to be removed to help improve retail participation in stock trading. The constraints include the 30% Bumi quota for licensed dealers, which is said to be limiting the growth of remisiers and dealers. This has hampered retail investor growth.

• "It's fine to have this requirement, but if it's getting in the way of the growth of the industry, then I think we should consider some other ways of encouraging more Bumiputera participation in the industry," Datuk Yusli said. "We rely a lot on the retail broker and remisier base to tap into the retail investor segment. But if you study the statistics over the last 10 to 15 years, the number of retail brokers and remisiers hasn't grown," he lamented. The number of active remisiers has shrunk "quite substantially" and this will get in the way of Bursa trying to grow the retail segment. 
• He also thinks that more foreign brokers should be allowed to serve investors, particularly retail investors, as this would stir innovation in the industry. "We have a very strong middle-class, which I think is not being adequately serviced by our retail brokers," he remarked. (BT) 

IOI Corp dismissed claims by a green group that it cleared rainforests on Borneo island to expand oil palm estates, saying the report was inaccurate.

• IOI Corp said on Friday it conducted its own investigations and held a dialogue with Friends of the Earth group, which published a report last week looking at how the planter was expanding estates on the Indonesian side of the island. The report alleged the planter was enroaching into rainforests, draining peatlands and practicing open burning, which leads to vast amounts of global warming emissions getting released. 
• That prompted one of IOI's key customers, Neste Oil to say it will carry out its own investigations on the planter that supplies Finnish refiner's biofuel plants in Europe.
• "It has been established that Friends of the Earth's field research had been highly selective and limited, and that several incidents on which allegations were based were incorrectly reported," IOI said in a statement on its website. "IOI Corporation is also not involved in any open burning activities and as part of its zero-burning policy, it is monitoring and preventing third-party burning activities on its concessions."
• The planter also said, without going into the details, that it had set up a clear action list and timeframe to address Friends of the Earth's remaining concerns. IOI owns 80,000 hectares of land in Indonesia, mostly in Kalimantan province in Borneo. (Reuters)

The prompt response by IOI Corp on the negative report by Friends of the Earth is positive as it will help allay fears that this could escalate to a bigger issue, for example its customers potentially cutting ties with the group. The report has so far led one of IOI Corp's customers to initiate investigation into the planter's estate practices in Indonesia.

Nestle SA’s decision to stop buying from Indonesian palm-oil producer Sinar Mas Group over deforestation concerns is “perfectly normal,” the country’s environment minister said, suggesting the government doesn’t plan to protest. “That’s their right as a consumer,” Gusti M. Hatta said in an interview in Jakarta yesterday, speaking of Nestle’s decision. “If there’s a clear violation, then I would cut them off without mercy,” he said, adding an investigation into the country’s biggest maker of palm oil is ongoing. Nestle’s dropping of Sinar Mas sparked calls for the government to speak out on behalf of the palm-oil industry, which produces the country’s biggest agricultural export by sales. The Indonesian Palm Oil Association last week said the Vevey, Switzerland-based company’s decision was “unfair.” (Bloomberg)

The Invest Malaysia 2010 conference is expected to attract over 600 participants. Todate, 170 local and foreign investment institutions had shown interest, Bursa Malaysia said in a joint statement with co-hosts, Maybank Investment Bank and Nomura Holdings. "The conference, themed 'Powering Global Excellence', offers an opportunity for access to key personalities who have contributed to the country's success story," it said. (Bernama)

Malaysia needs more companies that represent the country's strengths listed on Bursa Malaysia, says Bursa Malaysia CEO Datuk Sri Yusli Mohamed Yusof. "We have icons in plantations (i.e. Sime Darby Bhd) and rubber gloves (i.e. Top Glove Bhd), but we don't have major icons in oil and gas, for example," said Yusli. Malaysia is strong in Islamic finance, business process outsourcing and medical tourism, but there are no real icons on Bursa representing these fields for people to invest in, he noted. He said there were already such companies in the pipeline that could be listed but some were possibly not ready yet.

• "As a country we have certain strengths and we should be highlighting those strengths. So if we happen to have a Fortune 500 company, most countries would be excited to profile this on their market," he remarked. Malaysia's oil and gas giant Petronas, a Fortune 500 company, stands out as an unlisted icon. Big new listings have been slow in coming to Bursa and Yusli's job to spur this has been made more frustrating with a rising number of sizeable companies going for privatisations and delistings. (BT)

Tenaga (TNB) wants to resume the survey in Kampung Sungai Terentang, Rawang so that work on the Central Area Reinforcement (CAR) project can proceed. President/CEO Datuk Seri Che Khalib Mohd Noh said, "We are a responsible GLC and cannot simply go in and do what we like. We will make sure there will be minimal land acquisition within the area.” "TNB has seen 'near-miss' blackout. The project is critical and we are trying to do whatever it takes to avoid any blackout again," he added. (Bernama)

The first phase of the study on the restructuring of toll rates has been completed and the Economic Planning Unit (EPU) is now in various stages of deliberation with government agencies and toll concessionaires, said Minister in the Prime Minister's Department Tan Sri Nor Mohamed Yakcop. The government was looking into how best to implement the process without burdening the low-income group. Nor Mohamed said the government needed to look into many aspects before making a decision as it will affect various parties including the government, consumers and concessionaires. (Bernama)

The Malaysian Automotive Association (MAA) is maintaining its motor vehicle sales forecast at 550,000 units this year compared with 536,905 units sold last year (+2.4% yoy). President Datuk Aishah Ahmad said the target is achievable following improved economic conditions and positive performance in 1Q10’s sales, estimated to record more than 20% growth. "2Q10 seems to be positive too as car sales are improving and we hope the momentum will continue," she added. (Bernama)

Volvo Construction Equipment has appointed TCIM Sdn Bhd as the Malaysian distributor for Shandong Lingong (SDLG) Wheel Loaders from China. TCIM is a subsidiary of Warisan TC Holdings (Tan Chong Group) while Shandong Lingong Machinery Co. Ltd is a construction equipment manufacturer. Following this, the LG938 and LG958 Wheel Loaders were unveiled in the Malaysian market. (Bernama)

The Berjaya group’s Cosway Corp Ltd is on track to realise its global ambition by establishing presence in two of the world’s largest economies – the United States and Japan – in the next few months as well as Europe later this year. Already a major player in Asia Pacific, Cosway will begin operations in the US and Japan by end-May and August respectively. Its venture into Europe will kick off in Britain in the fourth quarter of the year and subsequently in Germany early next year. Founder and CEO Al Chuah is confident that Cosway’s entry into major developed economies will catapult the multi-level marketing company into the global top three over the next one to two years. At present, it is among the 20 largest direct-selling companies in the world. To facilitate its aggressive overseas expansion, Chuah says the company has allocated RM47m as capital expenditure (capex) for its financial year ending April 30, 2010 (FY10). (Starbiz)

Berjaya Corp chairman and chief executive officer Tan Sri Vincent Tan and Tan Sri Lim Kok Wing have been named The BrandLaureate Entrepreneur of the Year Award and The BrandLaureate CEO of the Year Award respectively. (Starbiz)

MISC started its new East India Service (EIS) with the first sailing from Yangon, Myanmar, on March 22. Through EIS, MISC offers a dedicated weekly service between East India and Myanmar with routes from Yangon, Chennai, Colombo, Chenna and back to Yangon. MISC said the new service will allow customer in the region to access its premium halal express service (HES) in Colombo and reach the Middle East and Far East markets. The weekly service is being served by two MISC's 700-TEU (20-foot equivalent unit) capacity vessels - Bunga Mas 11 and Bunga Mas 12. The EIS also sees MISC intensify its commitment to customers in India as it now adds Chennai to the list of Indian ports currently called by its vessels, namely Nhava Sheva and Pipavav. "With just a three-day transit time between Yangon and Chennai, EIS has one of the most competitive transits in the market," the national shipping firm said in a statement last week. (BT)

Alliance Bank Malaysia is considering a candidate from among eight individuals to replace Datuk Bridget Lai as its CEO, sources said. The bank hopes to send the name of the chosen candidate to Bank Negara Malaysia for approval before the end of next month. Bank Negara typically takes about two to three months to approve such candidates, which means that Alliance Bank could have a new CEO in place by end-June.

• Out of the eight candidates, three are Malaysian, three Singaporean and the rest foreigners from other countries. All are from the banking industry. "Except for one, most of the names are not familiar," one source said. 
• Sources said Alliance Bank is also on the lookout for senior management as it looks to partially reorganise the bank's management structure. At least two people quit recently. New positions may be created and it may be looking for more than five individuals, the sources said. (BT)

EON Capital has received Bank Negara Malaysia's approval to bring in seven new independent directors and let go of two. The new directors were earlier appointed by its shareholders during a special meeting this month. Their appointments became official on 26 Mar 10 after Bank Negara's approval. The central bank also allowed Datuk Dr Mohd Shahari Ahmad Jabar and Rodney Gordon Ward - the last two of four independent directors who tendered their resignation last week - to leave. (BT)

Axiata is expected to raise between RM1.8-RM2bn in gross proceeds from an initial offering of shares in its subsidiary, Indonesia based XL Axiata. It said in a statement that it has successfully completed the book building exercise for the international offering of shares in XL with the sale of 1.53bn XL shares representing 18% stake at the price of Rp3,300/share. Axiata said the offering could be upsized by an additional 153m XL shares under the option granted to Goldman Sachs in connection with price stabilisation initiatives. The offering was oversubscribed by three to four times and was priced at the high end of the indicative range of Rp3,000-Rp3,300 per share. (Starbiz)

India telcos got temporary relief against shelling out higher taxes to the government from Apr 1. The telecom tribunal , TDSAT, has stayed the government’s directive to hike the levy operators pay to use spectrum by up to 50%. The country’s leading GSM telcos — Bharti Airtel, Vodafone Essar and Idea Cellular — had approached the tribunal against the new charges. Currently, all mobile services in the country are offered on 2G frequencies and telecom operators pay 2-6 % of their annual gross revenue, depending on the amount of spectrum they hold, as spectrum usage charges to the government. Last month, the government announced it was increasing this levy by up to 50%, implying that telcos would be charged 3-8 % of their revenues as spectrum usage fee in the coming financial year. (Economic Times of India)

MMC Corp has hired HSBC Holdings plc’s local unit to help it borrow RM750.75m, said a person familiar with the matter. The company’s amortising loan will be for five years, said the person. (Bloomberg, BT)

Alam Maritim has landed two charter contracts totaling RM83.16m from two unidentified oil majors to provide an accommodation vessel and an accommodation work barge for a primary period of 13 months with options to extend for two years. (Malaysian Reserve)

Mah Sing Group is confident of achieving a sales target of RM1bn this year encouraged by the RM516m sales recorded in 1Q 2010. "This is 3x the RM170m sales achieved in 1Q09, said MD Tan Sri Leong Hoy Kum. (Bernama)

Unisem is allocating between US$60-70m as capex for FY10 to expand capacity and capitalise on rising demand for electrical and electronic (E&E) components and products. Unisem chairman and MD John Chia said about 75% of the capex would go towards expanding production capacity at its manufacturing site in Chengdu, China by building more factories. The remaining 25% will be used to augment the assembly and test capabilities at its factories in Ipoh, and Batam. "We will embark on organic growth in 2010- 2012," Chia said in a recent interview. Chia said the group's two factories in China were running at full capacity and expansion was needed to double the daily semiconductor output to 10m pieces per day. It has no immediate fund raising plans. (Financial Daily)