20120503 1022 Malaysia Corporate Related News.

The controversial share swap crafted for the benefit of the country‟s aviation industry had led to „an impediment‟ to the revival of Malaysian Airlines (MAS) and has to be ditched. However, both MAS and AirAsia will still cooperate on several areas in a bid to save cost in line with global trends. Khazanah Nasional said it had terminated the share swap with AirAsia major shareholder Tune Air. Both Tan Sri Tony Fernandes and Datuk Kamarudin Meranun resigned from the MAS board the same day. The parties entered into supplementary agreements to jointly explore and set up JV companies to provide aircraft component maintenance support and repair services, and to set up a SPV for procurement with the aim of saving cost. MAS will hold a 50% equity stake in the SPV with AirAsia (35%) and AirAsia X (15%). They will continue to explore cooperation in the area of training. Under the earlier agreement, MAS was to be only a full-service premium carrier, while AirAsia and AirAsia X will be low-cost carriers. The new collaboration terms allow the airlines to enter each other‟s domain if they wish to. Fernandes said, “The sad part for me is that I have left something unfinished and I know both me, and Kamarudin could have done a lot to turn around MAS. But on the positive side, after 10 years of pain and after eight months, we now are very close to MAS and Khazanah and that is very positive as all our energies can be now focused to tap the amazing growth potential of Asean and Asia.” With the reversal, the shares will be transferred back to the original owners and Khazanah‟s stake in MAS will rise from 49% to 69.5% thereby triggering the requirement to make a general offer. But Khazanah said it had applied for and got a waiver from the Securities Commission from making the GO. MAS employees union president Alias Aziz said, “The staff morale is up again and we would like to thank the Prime Minister. Had he not listened we would have to continue to suffer. And as far as the CCF is concerned, we would study the implications on MAS. So long it benefits MAS, we will support it.” (Financial Daily)

Malaysia's policy response to Jakarta's lower export tax for refined palm oil, which has shifted orders away to Indonesia, may come after the government lists its plantation assets in a US$3bn IPO, said top industry analyst Dorab Mistry. Malaysia has struggled to formulate a response to the new tax regime since it came into force in September, allowing Indonesian refiners to export at a sizable discount and grab market share. "My expectation is that the Malaysian response will not come until the FELDA IPO is safely executed and the market gives FELDA shares a warm welcome," Mistry, who trades for Indian conglomerate Godrej International added. (Reuters)

Future highway concession agreements in Selangor will have to include an "exit clause" which allows for toll collection to be stopped once the concessionaire makes its projected profit. MB Tan Sri Khalid Ibrahim said once the projected profit was met, the management of the project would also be transferred to the state government. "This will allow concessions to end earlier. For example, if the concession is 40 years long, but the highway concessionaire makes the projected profit within 25 years due to heavy traffic volume, then the exit clause will kick in. "That means toll collection can be stopped and the highway will be managed by the government," he said. Should any party object to the proposal, Khalid said the state government would not help them acquire the land needed to develop the highways. There are "five or six" proposed highways in the state, he said, including the Sungai Besi-Ulu Klang Expressway (SUKE) and West Coast Expressway. On principle, the state had agreed to the construction of SUKE. (Starbiz)

Astro has denied any wrongdoing amid forgery allegations raised by Lippo Group against its executive deputy chairman Ralph Marshall. The pay-TV operator claims the allegations are a ploy by Lippo Group to avoid paying some US$300m in damages owed to Astro from an international arbitration award over their failed business venture. “Astro categorically denies any wrongdoing on its part and on the part of Marshall, and will take all steps necessary to challenge these defamatory allegations against Marshall, including seeking relief available in international law." “Their calculation is that if they can exploit the criminal law to cause confusion and fear, they can avoid paying the damages,” Astro‟s lawyer Hafzan Taher said. According to recent media reports, Indonesian police have issued an arrest warrant for Marshall – the right hand man of tycoon T. Ananda Krishnan – and are also attempting to seek a red notice alert from Interpol.(BT)

Malaysia has appointed Maybank Investment Bank, CIMB Investment Bank, RHB Investment Bank and AmInvestment Bank to manage a sale of Islamic bonds to partly finance the construction of a mass railway in Kuala Lumpur, three people familiar with the matter said. Dana Infra, a company owned by the Finance Ministry and created to fund development projects, will sell ringgit-denominated notes as early as the end of this month, said the people. The government has yet to set a final amount for the sale and agreed to guarantee RM8bn in the initial issuance, which could be as much as RM2bn, two of the people said. Dana Infra may issue an additional RM30bn of the securities via a 50-year programme, which will be announced later. (Bloomberg)

The new CEO of Tenaga Nasional will be announced today to replace current president and CEO Datuk Seri Che Khalib. The new CEO will be an internal candidate a source said as TNB has a history of promoting from within such as the late Datuk Pian Sukro. Potential appointees could be TNB‟s current COO Datuk Azman Mohd, VP of generation Datuk Mohd Nazri Shahruddin and VP of transmission Datuk Rozimi Remeli. (BT)

Malakoff Corp, a unit of MMC Corp has acquired a 40% stake in Hidd Power Co (HPC), a power and water generation provider located in Bahrain. However, the price at which Malakoff acquired the stake was not disclosed. The good news is that power projects in the United Arab Emirates do not have a very high sovereign risk compared with places such as Pakistan, where reports suggest that Malakoff was proposing to set up two power plants. (Financial Daily)

Opcom signed a RM82m two-year variation contract with Telekom Malaysia. Opcom said on Wednesday the variation contract was for a two-year extension of the contract to supply and provide support services of passive fibre-to-the-home system. To recap, on April 22, 2009, Opcom announced that Opcom Cables gad received a letter of award for RM359m from TM for the contract. Subsequently, it announced the two-year extension of the contract from April 2, 2011 to April 19, 2013 on May 23, 2011. (StarBiz)

YTL Communications is willing to consider collaborating with other players in Long Term Evolution (LTE) or 4G services, said YTL Corp group MD Tan Sri Francis Yeoh. The company will increase is base stations to 5,000 by year-end vs 2,200 currently. It aims to grow its subscriber base to 0.5m by end-12. The company launched its first smartphone, the Eclipse, which runs on its converged 4G network. Manufactured by Foxconn and developed jointly with GCT Semiconductor and D2 Technologies, the Eclipse is priced without a data plan at RM1,688. (StarBiz)

YTL Communications confirmed that it has secured the 1Bestarinet projects, worth RM1.5bn for the first five years. According to the 1Bestarinet website, work has already started on the project which aims to provide internet access and a virtual learning platform to around 10,000 schools. (Financial Daily)

QSR Brands will invest some RM21m in new Pizza Hut restaurants and upgrading existing ones this year. It plans to open five dine-in Pizza Hut restaurants in Malaysia with an investment of RM6m and upgrade 30 outlets with an allocation of RM15m. QSR Brands managing director Jamaludin Md Ali said there are currently 253 Pizza Hut restaurants in the country, including Pizza Hut Delivery outlets. Of this, 210 are dine-in outlets. "Last year, sales of Pizza Hut Malaysia rose 8% to RM442m, and we expect double-digit growth this year," he said. It introduced 24 new items, including non-pizza and non-pasta items such as Western favourites, sandwiches and rice dishes. "The new menu is part of our growth strategy which is to maintain our existing range of products and from time to time add new items that focus on value to customers," Jamaludin said, adding that the new menu would make the Pizza Hut brand even more relevant to its growing young affluent customer base. Pizza Hut is spending RM2m on advertising and promotion of its new dine-in menu, including TV and radio commercials, press advertisements, teasers, in-store promotions and point-of-sale materials. (Sun)

Domino's Pizza Malaysia wants to enter the East Coast and East Malaysia markets by early 2013 and end-2013, respectively, said president and chief operating officer of Domino's Pizza Malaysia and Singapore, Ba U Shan-Ting. He said there is a lot of scope to grow in the delivery segment, especially in areas like the East Coast, Sabah and Sarawak, which if tapped, would enable it to maintain its market leadership in the delivery segment. He said the delivery segment makes up two-thirds of its business and it does not compete in the dine-in segment. "We are looking seriously at East Malaysia. We're now doing surveys, understanding the market …we will go into the market possibly next year. There are a lot of logistic issues," he said. Ba said this year, it will spend up to RM12.5m on 25 new stores in the peninsula, bringing its total number of stores to 100 by year-end. He added that each store costs up to RM500,000 and it has already opened five out of the 25 new stores for this year, bringing the number of outlets it currently operates to 80. The new stores are planned for Selangor, Kuala Lumpur, Negri Sembilan, Penang, Perak, Malacca and Johor. On its sales target, Ba said it aims for every store to have double-digit growth each year. Last year, its unaudited total sales were in excess of RM100m. Domino's allocates about 6% of its revenue for advertising and promotion activities every year. This year, it will spend close to RM1m on the "Extreme Edge" marketing campaign alone. (Sun)

Bintulu Port Holdings said the High Court of Bintulu, Sarawak has dismissed with cost the injunction orders and summons initiated by Integrated Marine Works (IMW) preventing the former from holding a tender for dredging works for a proposed Samalaju Port development project. IMW had claimed that the dredging works for the Samalaju Port must be awarded to it via direct negotiations based on the agreement it has with the government of Malaysia. (Malaysian Reserve)

BMW Group Malaysia has announced record performances in the first quarter of 2012 for its BMW, MINI and Motorrad brands. As of March 2012, the group delivered a total of 1,516 vehicles in the country, up 16% over the 1,308 units sold during the same period last year. Group managing director Geoffrey Briscoe said the introduction of sustainable and highly advanced green technology vehicles to the Malaysian market has been a key factor of its growing success as "it has enabled us to serve a market which is becoming increasingly conscious of the need to conserve resources and the environment". Also contributing to the group's growing performance is its network of dealerships which has grown steadily to 15 nationwide. (Bernama, BT)

MBM Resources intends to utilise RM75m, from up to RM104.6m expected to be raised by its proposed rights issue with warrants, to expand and enhance its nationwide retail and service network with new 3S (sales, service, and spare parts) centres. Group managing director Looi Kok Loon said the raising of funds will come progressively over the period of five years to help MBMR in terms of funding needs for future expansion. In a filing to Bursa Malaysia, MBMR fixed the price of its 73.7m renounceable rights issue at RM1.42 per rights share while the exercise price of the accompanying free detabchable warrants at RM3.20 per warrants. (Malaysian Reserve)

Daya Materials' wholly-owned subsidiary, Daya CMT (DCMT) has been awarded a contract from Yuk Tung Cop for the construction of the proposed three-blocks of 28-storey mixed development for RM270m. The project was scheduled to begin in May 2012 and is expected to be completed within approximately 30 months. DCMT will fund the development of this project through internally-generated funds and bank borowings. (Malaysian Reserve)

HeiTech Padu has been awarded a RM15.2m contract by Jabatan Pendaftaran Negara for the extension of maintenance services of the wide area network. (Malaysian Reserve)

Menang Corp, through its 51%-owned subsidiary Rumpun Positif (RPSB), has bagged a RM260m contract from the Ministry of Higher Education and Universiti Teknology Mara (UiTM). The agreement is for RPSB to embark on the construction of the proposed UiTM satellite campus in Selangor on a private finance initiative basis. Menang said the total construction cost for the project will come to about RM260m. The construction of the proposed campus under the build-lease-maintain-transfer concept is said to take three years to complete. Thereafter, RPSP will lease the campus to UiTM for a 20-year period. (Financial Daily)

Red FM has maintained its position as the only local English radio station to achieve continuous growth over five years, according to the first Nielsen Radio Audience Measurement survey of 2012. With more followers coming on board, the audience for Red FM has grown to 300,000 listeners. The all new Red Breakfast show with Sarimah and Lil' Kev increased to 112,000 listeners and the Red Fix with Terry and Azura received a boost of 170,000 listeners. “We not only increased our total audience, but saw an increase in the sought after higher-income listeners. This is a fantastic achievement and it is due to the amazing team behind the station as well as our supportive partners,” Red FM COO Azrullah Mohd Nor said. (The Star)

Yinson Holdings: To acquire more assets
Yinson Holdings is gearing up to buy an offshore support vessel (OSV) and a floating, storage and offloading (FSO) vessel to be financed via proceeds from a private placement offering. Executive director Lim Chern Yuan said the company plans to use part of the RM20.4m proceeds from its private placement of 12m new shares to buy the new assets while adding that last year, Yinson has used its cash of RM26.4m for a 40% investment in Vietnamese Port of Phu My and to purchase an FSO. Lim, however, said Yinson will not place an order for the OSV until a contract is secured while adding that he does not see any problems in acquiring new ships due to the general oversupply of OSVs in the market. He said Yinson partnered with shipyards such as Nam Cheong Ltd to bid for jobs since the company needed companies that have the expertise. (Business Times)

Oil & Gas: Petronas offloads equity in Australia's APA Group
In a statement, APA said Petronas via its unit Petronas Australia Pty Ltd has sold the 111.3m securities it holds in APA, equivalent to 17.3% of the group's issued capital, in an institutional bookbuilding managed by Morgan Stanley. APA group MD Mick McCormack said Petronas has advised that its decision to sell follows a rationalisation of its investment portfolio. APA is Australia's largest natural gas infrastructure business, owning and or operating more than US$8bn (RM24bn) of gas transmission and distribution assets. Its pipelines and assets span every state and territory on mainland Australia, delivering 50% of the nation's gas usage.(Business Times)


Ramunia to seek nod for regularisation plan
Offshore oil and gas fabricator Ramunia Holdings Bhd said an extraordinary general meeting will be held on May 23 2012, to seek shareholders approval for the company's regularisation plan, approved by Bursa Malaysia on January 19.  The regularisation plan was submitted by AmInvestment Bank Bhd on July 13 2011, following the classification of Ramunia as a Practice Note 17 (PN17) company. (Source: Business Times)

Oil & Gas: 5 firms bid for oilfield jobs
Industry sources indicated that at least 5 local companies have put in their joint bids with foreign companies for the award of marginal oilfield development by  Petronas. The  5 are believed to be Ramunia Holdings, Boustead Heavy Industries Corp, Puncak Niaga Holdings, Daya Materials and a company under Perwaja Holdings. A source familiar with the matter said  Petronas is evaluating the bids now and will be making the awards soon. Petronas president and CEO Datuk Shamsul Azhar Abbas said in Mar that the national oil company was expected to award the next round of risk service contracts (RSCs) for the development of marginal oilfields in the next two months. (StarBiz)

Oil & Gas: Aker Solutions wins Siakap North-Petai job
Aker Solutions has been awarded a contract by Murphy Sabah Oil for the delivery of a subsea production system for the Siakap North-Petai deepwater development. The company however did not disclose the contract value. Siakap North-Petai is located offshore Sabah, in a water depth of 1,400 metres. The scope of work includes 13 subsea trees, 8 manifolds, well jumpers, engineering for topside controls and lifecycle support services. The first hardware delivery is scheduled for 1Q 2013. According to Aker Solutions, the contract will be delivered out of its high-tech subsea manufacturing centre in Port Klang, Malaysia. The subsea production system will be tied back to Murphy’s Kikeh floating production storage and offloading vessel. Aker Solutions is preparing for major growth by investing US$87m in its subsea business. This investment is set to double the capacity of its manufacturing plants in Tranby, Norway, and Port Klang, Malaysia. In addition, a new service base will also be established in Malaysia. (Business Times)

Aviation: IATA says total passenger demand for March up 7.6%
The International Air Transport Association (IATA) said total passenger demand rose 7.6% and freight demand climbed 0.3% in Mar 2012 compared with the same month last year. Comparisons with March last year were affected by events that depressed passenger demand in 2011, including the Arab Spring, which disrupted travel in the Middle East and North Africa beginning in Feb 2011 and the earthquake and tsunami in Japan in Mar 2011, that impacted air travel across the Asia-Pacific region. IATA estimated that the y-o-y rise in air travel in Mar was about two percentage points higher than it would otherwise have been in the absence of these events. Cargo demand, meanwhile, was affected by the timing of the Chinese New Year, which occurred in Jan this year - leading to stronger Feb shipments - but took place in Feb 2011, leading to stronger Mar 2011 shipments and weaker y-o-y comparisons. (Bernama)

QSR: To invest MYR21m in new Pizza Hut outlets, upgrading. QSR Brands Bhd will invest some MYR21m in new restaurants and upgrading existing ones this year. It plans to open five dine-in Pizza Hut restaurants in Malaysia with an investment of MYR6m and upgrade 30 outlets with an allocation of MYR15m. (Source: The Sun Daily)