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Comment on After Ananda Krishnan loan, 1MDB now needs government cash by waterfrontcoolie

BY THE EDGE FINANCIAL DAILY
The Malaysian Insider
23 February 2015

1MDB was not only helped by billionaire T. Ananda Krishnan to settle its RM2 billion debt to banks, but it may also require a cash injection of as much as RM3 billion from its owner, the Ministry? of Finance (MoF), say sources.

They say the controversial debt-laden outfit is facing a cash crunch as income from its power assets is not enough for debt servicing and it has run out of borrowing options, as shown by having to turn to a businessman for help.

Ananda provided a 15-month RM2 billion loan to enable 1MDB to settle its loan with a consortium of local banks on February 13.

Sources familiar with the matter confirmed this with The Edge Financial Daily and also expressed their surprise that 1MDB president and group executive director Arul Kanda Kandasamy had dismissed media reports about the loan from Ananda as mere speculation.

Arul had announced on February 13 that 1MDB had settled the RM2 billion owed to the consortium led by Maybank and RHB Bank Bhd which was first due on November 30, 2014. The loan was settled in time to prevent the banks from declaring a default.

Arul did not explain how it raised the money in his February 13 statement, but in an interview with Mingguan Malaysia? two days later, he said reports that AK lent the money were pure speculation.

“Ananda has never said anything about this matter. This is speculation by third parties,” Mingguan Malaysia quoted him as saying.

“I don’t know how he (Arul) can claim that (AK did not help),” says a source.

“It was a simple, clean loan (with no conditions) as AK did not want to be seen as taking advantage (by setting tough conditions).”

In reply to questions by The Edge on why he could not just come out and disclose how 1MDB raised the money, Arul said: “The facts on the (settlement of the) loan will be revealed in the appropriate forum/time i.e. our next set of accounts. To demand any different is to set a different standard for 1MDB which is not only unfair, but also ignoring our right and that of our stakeholders to legal and commercial confidentiality”.

Paying off the RM2 billion debt does not solve the problem for 1MDB, which has total debts of more than RM42 billion and annual debt servicing of RM2.31 billion and a negative cash flow of RM2.25 billion in its financial year ended March 31, 2014.

Sources say that MoF is aware of 1MDB’s cash-flow problem and knows it may have no choice but to step in with a RM3 billion injection.

But in order for that to happen, approval has to be given by the Cabinet, given the large amount of money involved and all the controversy that 1MDB has generated.

The government had on February 11 and 12 raised RM2.1 billion through two treasury bill issues that money market dealers say were unusually large amounts. Sources say the MOF could be getting the money ready should it go ahead and come to the aid of 1MDB.

The cash injection will have to be done before 1MDB’s next financial year close on March 31, 2015 – which is just five weeks away.

?Despite concerns raised by so many parties, MOF officials have always insisted that 1MDB was financially healthy and that the government only had to put in RM1 million as initial capital because the company was strong enough to borrow to fund itself.

Arul, in a February 18 press release on its strategic review, said 1MDB would stop borrowing from now.

Sources say the truth is that 1MDB can no longer go to the market to borrow – whether through bank loans or bond issues.

“The size of its debt of RM42 billion, the massive negative cash flow it has experienced in the last two years plus its struggle to pay the RM2 billion makes it difficult for any bank to lend to them,” says one banker.

“Bond investors will also shy away from any new debt it wants to issue.”

1MDB recently called off a RM8.4 billion Islamic bond that it had planned to raise cash to finance the 3B power project.

Bankers say it was cancelled because of lukewarm response. Sources say bankers have also taken note of the fact that 1MDB has had difficulties proceeding with its plan to float its power assets to raise cash. – February 23, 2015.

[…]

Indiana Business Bancorp Reports First Quarter Results and Cash Dividend


Malaysia to open new budget airport in MH370 shadow

Sepang (Malaysia) (AFP) – Malaysia this week opens what it calls the world’s largest airport built specifically for low-cost airlines, a project driven by budget travel’s phenomenal growth but which debuts under the shadow of missing flight MH370. The $1.2 billion facility near the main Kuala Lumpur International Airport (KLIA) was originally targeted to open three years ago but has been hit by repeated delays, amid concerns over safety and subpar construction, even as costs have doubled. But the new KLIA2 budget terminal will begin operations Friday with an initial 56 flights, increasing the load as airlines move full operations over from a nearby existing facility in coming days. Its modern design features soaring ceilings, natural lighting, people-mover belts and improved connectivity with access to an existing express airport train to Kuala Lumpur 50 kilometres (31 miles) away.

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Police cripple loanshark ring with 12 arrests

My Paper
Thursday, Jun 06, 2013

A loan-shark syndicate has been crippled following the arrests of 12 suspects in an islandwide operation conducted on Tuesday and yesterday, said police yesterday.

The suspects, comprising 11 men and a woman, aged between 23 and 54, were nabbed in various locations.

The locations included Bedok North, Simei, Marine Parade, Potong Pasir, Serangoon and Ang Mo Kio.

During the five-hour operation, cash of more than $10,200, as well as an assortment of loan-shark paraphernalia – such as automated teller machine (ATM) cards, mobile phones, laptops and stacks of fliers – was seized.

The suspects are believed to have assisted the loan-shark syndicate by delivering illegal proceeds to Malaysia, conducting ATM transactions, collecting loan repayments and distributing fliers.

One of the modus operandi adopted by the syndicate was to advertise its loan facilities via fliers and mass SMSes, said the police.

Nine suspects are expected to face charges in court today while investigations against the remaining three are under way.


Get My Paper for more stories.

[…]

Fair to women and East Asians (The Funny Side)Moustaches wars not

By Nury Vittachi, IANS

Picture the scene. A banker, reluctant to give out a large cash loan to a desperate man, asks: “But do you have any valuable assets to offer as collateral?” The applicant points to his upper lip, saying: “Yes. My moustache.”

“Don’t be ridiculous,” says the banker. But no. That’s not what happens. This is Planet Earth, Weirdest Place in the Galaxy. So what ACTUALLY happened was that the banker said: “That’ll do nicely,” and handed over the money. True story.

In the Arab Emirates, male facial hair is being used as collateral for loans, I hear from a reporter researching facial hair. One of the most feared punishments for wrongdoing in that region is moustachectomy, which is the forced shaving of the upper lip, a traumatic experience which victims liken to castration, although I don’t suppose many of them have actually been castrated, not more than once, anyway.

Facial hair is in, in a big way. Thousands of people in India joined in the Australian tradition of turning November into Movember, or “grow-a-moustache” month, and almost all were men.

That’s one of several problems with this trend. First, many women find it extremely hard to grow moustaches, so it’s only a matter of time before all female Earthlings take
out a class action against the organisers for trillions of bucks.

Second, baldies (like the present writer) cannot grow moustaches as it makes us look like gay guys from the 1970s, not a good look.

Third, many men (and women) in China cannot grow moustaches at all, because Chinese people are more highly evolved than regular humans, or so a friend from Shanghai tells me. I was about to tell him he was talking rubbish, but held back, in case he wasn’t. I know for a fact that Chinese WOMEN have weird superhuman powers, having encountered them regularly.

The Shanghai gentleman said it takes him a year to grow a moustache, and even then it is so sparse that it looks like a long, thin, flat spider perched on his lip.

Poor him. Moustaches boost male confidence, psychologists say. In parts of India, police officers have even been given government grants for moustache cultivation. (Not sure what they spend the money on, perhaps that Gro-Fast fertiliser you get in gardening shops?)

The following day I saw a report on the BBC that Turkish doctors are offering moustache implants for men (or presumably, eccentric women) who feel their upper lips are too naked. Simply book yourself into an Istanbul hospital and come out with a thick, luxurious Lech Walesa-style growth which curtains your whole mouth, filtering out bugs, acid rain, particulate matter, etc.

*-*

Anti-sexism campaigners are calling for the immediate arrest of everyone on Earth. This is because pretty much every country is littered with “Men Working” signs, which are blatantly sexist, according to Esther Leung and Anya Das, two feminist readers.

They were inspired to protest after reading that anti-sexists at a US college recently demanded the removal of Men Working signs at a construction site (although one report said that after they were removed, several people fell into holes).

But what should the signs be changed to? “Men AND Women Working” is fine in Asia, but is inaccurate in the West, where buildings are erected by guys only. “Construction Persons Working” is over-fussy.

“Illegal Immigrants Working” would be more honest for many places. One reader said the ladyboy district of Bangkok and most of San Francisco should have signs with extra quotation marks: “Men” Working. Having seen the astonishingly low level of activity at building sites around Asia, I would move the quotation marks along a bit, making it: Men “Working”.

One reader, whom I will not name because he will (and should) have his house burned down, said we could simply balance out all the Men Working signs around the world by placing “Women Working” signs in every kitchen. Careful.

A reader from Delhi pointed out that the word “man” comes from the Sanskrit word “manu” which means “human being”, so we should “simply use the original term”. Okay in principle, but “Manu Working” looks weird to me, especially since the only guy I know called Manu has a severe allergy to working, thinking, lifting a finger, or indeed any activity which involves using more than a single calorie of energy.

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Reader Ann Teoh tells me there’s uproar at hairdressing salons in Kelantan, Malaysia. Prudish officials have made it illegal for hairdressers of one sex to give haircuts to customers of another, indicating that doing so is equivalent to having sex. Officials: just try it. You are going to be SO disappointed.

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If traffic jams keep growing at present rates, key highways in Asia will be permanently gridlocked, greenies say. People will have to abandon vehicles and go back to walking and cycling, which would be a good thing.

It is already happening, campaigner Elly Sung told me. I believe it. This columnist visited Bangkok recently, and the drive from the airport to town took so long that I pretty much had to turn around straight way to head back to the airport.

Last week during a traffic jam in Russia, drivers took 24 hours to move one kilometre. This is extremely slow, comparable to the speed of a snail crossing a desert or a Greek businessman paying a tax bill. In China, a single traffic gridlock on the Beijing-Tibet road lasted NINE DAYS, and one on the Mongolia-Beijing road in Hebei lasted ELEVEN DAYS. Picture the scene: HUSBAND: “Bye, honey, I’m just popping out to the shop to buy some milk.” WIFE: “Okay. See you in a month!”

“But for the gridlock plan to work, we need governments to encourage reckless amounts of car production,” said Elly. “Luckily, almost every government in Asia is co-operating.”

*-*

The Russian government just put out an official message that citizens will NOT die from the so-called Mayan “end of the world” prediction on December 21. Phew. Russian citizens can get back to their normal pastimes, i.e., dying from alcoholism, snow storms and gun violence.

*-*

When Crown Princess Mette-Marit of Norway visited a friend’s baby twins at the hospital in New Delhi recently, staff assumed she was a domestic helper, the media said. This is ridiculous. We’re talking about one of the most important, most challenging, most respected roles in the world. Being a domestic helper is tough: no mere princess could manage it.

*-*

Talking of royals, friends of the UK’s Princess Kate say she may name her baby after where it was conceived – which means it will have an Asian name. King Malaysia? Queen Singapore? Good thing they didn’t stop in Hong Kong. The kid would have ended up as King Kong.

(Nury Vittachi is an Asia-based frequent traveller. Send ideas and comments via www.mrjam.org)

–IANS

[…]

Needing money to grow trees? If you’re not self-sufficient, look for the right bank or charm an investor

LAST week’s article on Going Green generated many emails from small entrepreneurs. One of the most common dilemma was their inability to secure bank loans despite being in commercial farming of cash crops for a few years.

So what do you think went wrong for these entrepreneurs?

Perhaps they did not keep proper accounts and as such were unable to present a financial statement and projection. Or they awere unable to articulate their vision and valid reasons on why they needed the loan. Or they had no properties of substantial value to act as collateral for a secured loan. Or they went to the wrong bank.

Imagine a loan officer of a commercial bank evaluating the expansion of your commercial farming project. You need RM2mil to acquire an additional 10 acres of farming land next to your existing 15 acres, clear and prepare the land, buy seedlings and fertilizers, buy additional farming equipment and invest in buildings and equipment for processing and storage. It will be a full 12 months before you begin to harvest. That is assuming, there is no attacks from pests and diseases and the weather is kind to you. No drought and no excessive rainfall.

You are now at the mercy of the loan officer and God.

The loan officer who is used to financing property mortgages and occasional factory equipment or trade related facilities frowns at your proposal, mulls over the viability of your project and shakes his head from side to side and hums quietly to himself. If he decides to proceed with your application, he has to buy a pair of Wellington boots, drive two hours to your farm, ask many naive questions and later rush to the bookshop to get a copy of Farming for Dummies. Honestly, do you think you stand a chance in getting that loan?

Finding financing from the right source is everything. In Malaysia, we have Agro Bank, which is owned by the government and supposedly staffed by loan officers of considerable experience in funding agriculture businesses, from farming to trading to project financing. If you have a viable agriculture project, Agro Bank is able to provide you from micro financing of RM5,000 to entrepreneur loans up to RM20,000 to special government loans up to RM10mil. Reflective of the high risk nature of agri loans, interest rates charged is about 15% pa. Still 15%.

Here again, you are at the mercy of the loan officer and God.

Never mind that costs of doing business has gone through the roof over the last 10 years, our Agro Bank is only able to extend a RM5,000 loan, which is just enough to plant fruits and vegetables in your backyard, and a RM20,000 loan, which is enough for you to farm your neighbours backyard as well. If you are a typical small time entrepreneur without any connections or political backing, there is absolutely no chance for you to get that RM5mil or RM10mil special government loan.

But then again, you can be totally inexperienced in farming or animal breeding and without an iota of a track record, you are able to secure a soft loan 50 times the size of what you really need. You just have to be creative in articulating your vision, be thick skinned in self-denial and voluminous in dishing out excuses. And you will do just fine.

Ok, again, I might have exaggerated a wee bit just to make a point. If you want to be an entrepreneur, you have to worry about the viability of your project and your source of funds from day one. You need to be realistic in the assessment of your own financial capabilities in the new venture as you have to choose between a controlling owner role or a minority partner role.

Assuming the full potential of your business is RM100mil with a profit of 10% and you can only contribute 30% of the capital to achieve this turnover. You will need to bring in investors for the balance of the 70% capital plus the ability to raise bank loans and facilities. The other option is go on your own, no bank loans, achieve a turnover of RM10mil and make your million. Which route will you choose?

27 years ago, my heart yearned for 100%, my pockets told me that it was an impossible dream and my head accepted a minority stake of 23%. God was kind to me by pairing me with an angel of an investor.

He took the leap of faith, showered me with wisdom and patience and allowed me to run the business like a proud owner. All he wanted in return was integrity, friendship and a thriving business so that he could be proud of me.

Small bumiputra entrepreneurs should take advantage of the many financing schemes available. The Agro Bank and SME Bank are pretty helpful in processing your application, which must reflect a viable business plan and a healthy cash flow to repay the loans.

For non-bumiputra startups, you are advised to make a choice right from the beginning. If you have sufficient funding to be the controlling owner, by all means, stick to the plan and hopefully later, you can secure a bank loan to expand your business. If you do not have the means, then my advice would be to look for a financial investor, hopefully supportive and kind.

Either way, you are at the mercy of the loan officer and God.

The writer is an entreprenuer who has run a successful business. Now semi-retired, he is eager to share his collective knowledge and experience. He can be reached at thtan@alliancecosmetics.com

[…]

13. ECM Libra proposes capital repayment, including RM442m cash


Published: Friday June 15, 2012 MYT 12:57:00 PM

ECM Libra proposes capital repayment, including RM442m cash

KUALA LUMPUR: ECM Libra Financial Group Bhd (ECMLFG) has proposed a capital repayment of RM442.64mil cash to its shareholders following the disposal of its investment banking business to K&N Kenanga Holdings Bhd in return for RM875.1mil in cash, stocks and loan stocks.

ECM Libra said on Friday it would also undertake a distribution-in-specie of 120 million Kenanga shares and RM47.75mil of nominal value of redeemable non-convertible unsecured loan stocks of Kenanga.

It added it would undertake a share split of ECMLFG shares after the proposed capital repayment, to facilitate the proposed share consolidation.

After the completion of the share split, ECMLFG shares shall be consolidated into ordinary shares of RM1 each in ECMLFG.

“The issued and paid-up share capital of ECMLFG after the proposed share split will be consolidated into RM265.222mil comprising 265.22mil ordinary shares of RM1 each under the minimum scenario and RM337.73mil comprising 337.73mil ordinary shares of RM1 each under the maximum scenario,” it said.

ECMLFG said the proposed disposal and proposed business merger were timely.

“The board is of the view that as a stand-alone mid-size investment bank, the prospects of the bank will be challenging. Therefore, the proposed disposal provides an opportunity for ECMLFG to exit the industry,” it said.

ECMFLG said the proposed capital restructuring was to return the proceeds received from the proposed disposal to the shareholders of ECMLFG.

More News Business Headlines Ananda plans US$1b pay-TV IPO by end-Sept Felda Global Ventures IPO oversubscribed 6.75 times Felda Global Venture institutional price fixed at RM4.55 (Update) Hopes of global response to Greek worries lift markets Glenealy Plantations plans RM500m debt notes for expansion N2N Connect confident of double-digit revenue growth Khazanah to rake in RM4.9b in unrealised profit from IHH listing Maxwell to conclude acquisition of HK firm within this yr Global shares rise on plans for central bank support Genting stocks lift KLCI, key markets up ECM Libra proposes capital repayment, including RM442m cash Wah Seong order book at RM1.2b, eyes more local O&G jobs Kenanga buys ECM Libra’s investment banking biz for RM875.1m (update) Glove makers up in early trade UK floods banking system with more than 100 billion pounds Pharmaniaga hits limit-up on trade resumption Maybank Research maintains Hold on Sime, TP of RM10.80 M&A Securities Research keeps Buy on Takaful, FV RM5.44 Global shares edge up as central banks stand ready to act RHB Research maintains FV for Top Glove RM4.95, market perform HDBSVR sees KLCI testing 1,580 Dell made rival US$2.15bil cash bid for Quest Wall Street rises on news central banks primed to act World economies prepare for panic after Greek polls(update) Tony Fernandes speaks to StarBiz on AirAsia’s future plans Billionaire Ananda’s Usaha Tegas among cornerstone investors in IHH US$2bil IPO Weaker pound spurring Takaful Malaysia to buy London properties Gerbang Nusajaya, with RM18bil GDV, to be launched by end-year Several allegations are thrown at MRT Corp and Prasarana over public rail projects Johor Corp issues RM3bil Islamic debt ITNL-Scomi shortlisted for India RM6bil rail job Siemens launches new green turbines Felda said to raise RM10.4bil from IPO RHB acquires Luster shares Pos Malaysia to diversify Expansion should boost QL results Credit Suisse urged to halt payouts Thai PTTEP to invest US$2.6bil in S-E Asia New Esprit chairman upbeat despite share slump Tinkler seeks US$2.5bil debt for Whitehaven bid Genetecs order book at RM149mil MASkargo to pay RM19mil fine to Australia Manufacturing sector sees better outlook in H2 YTL chief calls for consistency in Asean energy policy Ramunia unit wins RM177.5mil job Sime to invest RM1.4bil to expand China port Samsung to invest RM2.2bil in new plant in M’sia Axis-REIT buying two buildings in PJ Huawei set to help enhance Malaysias ICT training Believe in your strategies, marketers told Nokia plans to cut 10,000 more jobs(update) Merkel: Germanys powers are not unlimited Dimon rejects rules to block derivatives trading despite US$2bil loss last month Mexico slaps conditions on Televisa-Iusacell tie-up ANALYSIS-Drug costs become bigger issue in cancer care WSJ: Microsoft to buy Yammer for more than US$1 billionGo

[…]

UPDATE 1-Kenanga to boost investment bank, stock broking with ECM buy

* Malaysia’s Kenanga to pay 875 mln ringgit for ECM units

* To issue shares, loan stocks and pay cash for deal

* Deal to close year-end (Adds details, comments from company officials)

KUALA LUMPUR, June 15 (Reuters) – Malaysian investment bank, K&N Kenanga Holdings Bhd, will buy rival ECM Libra Financial Group Bhd’s financial units for 875.1 million ringgit ($274.5 million), making it the country’s largest independent investment bank by sales and third-largest share brokerage by trading value.

Kenanga will finance the deal by issuing 120 million of its shares at one ringgit each and 95.5 million loan stocks along with 659.6 million ringgit in cash, its group managing director, Chay Wai Leong, told reporters at a news conference.

The deal, expected to be completed by year-end, values ECM Libra’s investment banking arm at 1.27 times book value, which at end January stood at 688 million ringgit ($215.8 million).

Lee Kok Khee, senior director at Kenanga Investment, told reporters on Friday that the purchase would boost revenue by 10 to 15 percent annually due to a wider customer base and distribution network.

The move comes as Malaysian authorities encourage bank mergers to create larger groups with the financial muscle to grab market share as the Association of South East Asian Nations plans to form a single economic zone by 2015.

It also follows the recent tie-up between RHB Capital Bhd and OSK Holdings Bhd’s investment bank, which saw the merged entity become the biggest brokerage service provider by market share in Malaysia.

Kenanga and ECM Libra said on June 7 they had obtained Malaysian government approval for the deal.

“With the merger, Kenanga will have one in every five remisiers in the country, giving it Malaysia’s largest remisier network” said Chay, Kenanga’s group managing director.

ECM Libra intends to distribute the 16.4 percent stake it will hold in Kenanga after the deal among its existing shareholders.

(Reporting By Yantoultra Ngui and Anuradha Raghu; Editing By Siva Sithraputhran and Jacqueline Wong)

[…]

No windfall for settlers under FGVH listing, says PKR

KUALA LUMPUR, April 13 — PKR warned today that FELDA settlers and workers may be required to take bank loans to purchase FELDA Global Ventures Holdings (FGVH) shares once it goes public, instead of receiving the “unimaginable windfall” promised by Datuk Seri Najib Razak. […]