20100521 1039 Malaysia Corporate News.

The on-going internal probe by Sime Darby to find out how it made staggering losses has now been expanded to cover all its six business divisions. Chairman Tun Musa Hitam said the management and external professionals were now putting the conglomerate under the microscope to weed out any weaknesses before coming up with any short-term and long term restructuring efforts.

• "Work is in progress at Sime Darby. We are being transparent and very serious about it. Let the process of democracy work. I would like to assure the ordinary people, who are majority shareholders of Sime Darby, that nothing will be swept under the carpet. The timeline for this probe is as soon as possible, he added. On calls for him to step down, Musa said he and the entire board would do so only after going through due processs and then found guilty. (NST)

This move is positive in the long-term as this exercise will help identify and correct weaknesses in the group but may be negative in the short-term as it will lead to uncertainities over potential provisions in other divisions and future strategy of the group.

The Minority Shareholder Watchdog Group (MSWG) has raised questions over Sime Darby's nearly RM1bn loss from cost overruns in the group's energy and utilities division. MSWG CEO Rita Benoy Bushon said that the group's size and significance to the country's reputation locally and abroad made it absolutely necessary that a detailed and full disclosure of the goings-on in the energy and utilities unit be made public.

• She said there were questions over whether risks were appropriately addressed and whether the watchdog group's queries were appropriately addressed. She added that there were questions over why provisions were not made at the appropriate time when there was doubt of recovery and if independent directors could play a bigger role and devote more time to oversee the governance of the company. 
• Rita said another question was whether the group should stay more focused on the core business in order for there to be better management as “it is common knowledge that many investors buy Sime Darby shares not for its hotchpotch of businesses but mainly for its plantations business, which in 2009 contributed to 70% of the group's net profits. (Starbiz)

PM Datuk Seri Najib Razak said that Sime Darby should first find out why it has incurred the losses before any issue on responsibility was to be raised. "We need to investigate cause of the losses first. We can't do anything about the question of responsibility at this point in time," Najib added. (BT)

AirAsia launched its inaugural flight on the Bangalore-Kuala Lumpur sector yesterday. The sector is expected to have a load factor of almost 85% in the first few weeks. Ms. Kathleen Tan, Regional Head of Commercial, AirAsia said, “The daily service is expected to cater to significant traffic including business and leisure travelers as well as students to and from the tech-hub in southern India. In addition to this, the service is also expected to cater to medical tourism in Bangalore.” (Press release)
Bangalore is the sixth destination for AirAsia in India after Trivandrum, Kolkata, Chennai, Kochi, and Tiruchirappali. Additionally, Mumbai is served by AirAsia X. AirAsia will launch Hyderabad flights in July, while AirAsia X will fly to Delhi in August.

AirAsia will continue with plans for a dual listing in Thailand but will do so once the political environment there shows sign of recovery. "Plans are still afoot. Crisis comes and goes," said its group chief executive officer Datuk Seri Tony Fernandes. He said sales in Thailand slowed down in the last two months due to the uncertainties in that country and expects to have a tough time with its operations there up to July. AirAsia has yet to set a date for the listing. (BT)

The telecom regulator has come up with a draft spectrum plan in whci it propoes to refarm several blocks of frequency including those in the 850MHz, 900MHz and 2.5GHz bands. Those in the know say that the 900MHz and 2.5GHz spectra may be allocated for 4G sservices sometime next year, but it is not clear what the plan is for the 850MHz.

• DiGi chairman Sigve Brekke sid the company is hoping to get more spectra and is still in talks with the regulator on it. "From a fairness point, have a regulated industry where all players have equal frequency alloteed in equal frequency bands so that there is level playing field. 
• In the draft document, the regulator said that "due to greater demand for broadband services, several spectrum bands had been identified to be re-farmed in the near future. It cited the 450MHz, 790-960MHz, 1710-1885MHz and 2500-2690 MHz frequency bands as potential candidates for re-farming. (Starbiz)

MISC has sold its MT Bunga Siantan, a 15,999 dead-weight tonnage single-hull chemical tanker to PT Waruna Nusa Sentana for US$3.2m. MISC said that the sale is in line with its asset management strategy to phase out single hulled vessels and maintain a modern fleet of chemical tankers for its chemical business unit. (BT)

Allianz Malaysia, which will raise about RM611m from its proposed rights issue of 192.3m irredeemable convertible preference shares (ICPS), has fixed the issue price at RM3.18. The insurer told Bursa Malaysia these would be issued to shareholders on the basis of 125 new ICPS for every 100 shares held. (StarBiz)

RHB Capital has appointed Datuk Saw Choo Boon and Datuk Teo Chiang Liang independent and non-executive directors. (StarBiz)

The Asian Development Bank (ADB) has become the first supranational to list its medium-term notes (MTNs) issued under its RM3.8bn MTN programme on the Malaysian market. The MTN programme was established on 2006 and has a tenure of 15 years. Under the programme, two tranches of MTNs were listed on Wednesday and valued at RM1bn, specifically RM500m each for a 5- and 10-year term respectively. (BT, Bernama)

Petra Perdana is expected to continue attracting attention ahead of its AGM to be convened next month. The conclusion of its EGM held in Feb did not spell an end to the issues surrounding the company. A tussle is still believed to be ongoing.

• In the latest move, Petra Energy's wholly-owned subsidiary Petra Resources Sdn Bhd filed a writ of summons against seven persons it did not identify for breach of fiduciary duties and breach of trust. Former executive chairman and director Tengku Datuk Ibrahim Petra said it was really up to the shareholders what they wished to do in the light of recent development. “Personally, I think that shareholders may want to consider whether it's in the best interests of Petra Perdana that those involved in the suit continue to work in the company.” 
• Meanwhile, Petra Perdana when contacted said it had no information at this moment that the suit involved the company and/or its current employees. “In addition, as it is prima facie a legal case, it would be inappropriate for us to comment at the moment,” it added. (Star)

Khazanah Nasional said it will continue to sell its stake in non-core assets by the year-end but it will be done in an orderly manner. "Yes, there will be further divestments this year," said Khazanah Nasional Malaysia MD Tan Sri Azman Mokhtar. Khazanah has stakes in more than 50 companies, including Tenaga Nasional and Telekom Malaysia. (BT)