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From: AFP
Date: 05 May 1999
Time: 03:22:37
KUALA LUMPUR, May 5 (AFP) - A Malaysian private firm may make a second proposal if its cash offer to buy frozen local shares previously traded in Singapore's over-the-counter market is rejected, reports said Wednesday. The second offer would be in the form of a closed-end fund, the Business Times daily cited Effective Capital Sdn. Bhd. chief executive Mohamed Moiz Ali Moiz as saying.
It would involve an exchange of Singapore's Central Limit Order Bookshares for units in the fund, Mohamed Moiz said, adding the company was also discussing other options with Malaysian authorities.
He said the solution to the CLOB issue cannot be found through "knee-jerk emotional response" but in a "calm and well-thought manner, weighing the pros and cons of the matter from both sides of the causeway."
Effective Capital, linked to Singapore businessman Akbar Khan, offered to put up 5.8 billion ringgit (1.52 billion US dollars) cash for all CLOB shares, which were frozen when Malaysia imposed capital curbs last year.
An estimated 170,000 CLOB shareholders, largely Singaporeans, were caught by the freeze, which has become a sensitive bilateral issue.
Many CLOB stockholders and dealers had said the offer prices, which were at an average 45 percent discount of market prices on September 15 last year, were way too low from what they had initially invested.
But The Star daily cited Mohamad Moiz as saying that CLOB investors were not forced to take up the cash offer.
"CLOB shareholders are free to send their shares to us or keep them. That is their choice," he said.
"What we are doing is offering them what we consider is a reasonable way out of their dilemma and in the process, get a return on the risks we are undertaking."
Mohamad Moiz said the company had to take into account the risk factors, the price-to-earnings ratio of the companies, the fundamentals and marketability of the shares.
"By accepting the offer, CLOB securities holders are given the opportunity to receive cash in US dollars," he said.
"We are making this offer despite the buoyant stockmarket when the composite index broke the resistance level of around 600 points to its current level of nearly 700.
"We could have made it when the CI was just 400 and the offer prices would have been substantially lower," he added.
The New Straits Times cited him as saying that Effective Capital had to comply with two conditions set by Malaysian regulators -- that it cannot offload the shares on the local bourse nor seek management or board control of companies in which it has substantial shareholdings.
The company has received conditional approvals from Malaysia's securities commission, the Kuala Lumpur Stock Exchange, central bank and the foreign investment committee.
Effective Capital is wholly-owned by Tradium Corp. Bhd., an investment holding company, with Mohamed Moiz, Akbar Khan and Abdul Sathar Abdul Kadir as shareholders.
Mohamed Moiz said the company's proposal was considered by Malaysian authorities due to its commercial viability and not because of its alleged close links with important personalities here.
"We thought long and hard on this proposal. It took a team of 60 legal, financial and other related experts to come up with this proposal which we have worked on since January," he said.
Effective Capital has organised the necessary funding from a consortium of five local banks, he added.