Berjaya Group to be placed under s.176 -but KLSE still silent

The Edge has reported(see http://www.theedge.com.my/article.cfm?id=4635) that the entire Berjaya Group will be placed under s.176 protection to allow time for the restructuring it has announced to take place. The gist of s.176 of the Companies Act is provided below-strange requirement for a company that need not comply with the KLSE's requiremenst for companies in financial difficulty-eventhough it and its major sharehoolder have been subject to Danaharta intrusion, or assistance-one can never tell these days.

Schemes of Arrangement: Section 176(1) states as follows:-

Where a compromise or arrangement is proposed between a company and its creditors or any class of them or between the company and its members or any class of them the Court may on the application in a summary way of the company, or of any creditor or member of the company, or in the case of a company being wound up of the liquidator, order a meeting of the creditors or class of creditors or of the members of the company or class of members to be summoned in such manner as the Court directs.

In essence, section 176(1) provides for schemes of arrangement to be binding on creditors and members alike after the requisite approval by the specified majority and upon confirmation by the Court. Schemes of arrangement may be used for a variety of purposes and one purpose for which it is used for, with growing popularity, is the reconstruction of the financial affairs of a company heavily burdened with debt. It is essentially a formal compromise of a company’ s debts where there is a possibility of its business being
viable.

A KLSE announcement dated 26/10/99 by Berjaya Capital said that Danaharta had disposed of shares beneficially held for Berjaya Group. This suggests that Berjaya Group's shares in its subsidiary Berjaya Capital are or were held , in part or in its entirety, by Danaharta. It also suggests that Berjaya Group was/is  unable to service its loans. Yet another instance of Danaharta assistance to billionaire tycoon Vincent
Tan (see attached)
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Danaharta is likely to see further deterioration in the value of the 45 million or so Digi shares it holds as collateral for NPLs suffered by Digi executive chairman Vincent Tan.(see story attached)

Digi may need to write-off RM 98.98 million which it booked as an exceptional item in the financial year ended 30 April 1999. The financial statements for the year ended 30 April 2000, state at Note 19, that the amount represents" the charge-out during the previuos year of the subsidary's deffered expenditure,which had existed at the acquisition date, in respect of terminated subscribers as these were no longer recoverable."

Despite this, that amount was booked via Digi's 1999 P&L as an exceptional item, reducing its loss for the year to RM 77 million. The amount remains on the books as a reserve on consolidation.

In the event that Digi chooses not to write-of that amount, investors are  likely to value the company less, regardless of how Digi chooses to classify or reclassify debts gone bad.
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Danaharta Urus S/B , a wholly-owned subsidiary of Danaharta holds 45 million Digi.com shares(6.0% of issued shares) on behalf of Vincent Tan Chee Yiuon. 

It appears that but for Danaharta's intervention,  Vincent may have, as a result of a forced sale of those shares, lost control of Digi to his partner in the company, Telenor.

A further 6.2 percentage points   is held as pledged securities by various  nominee companies.

Another 6.6% or so held via  Vincent's Berjaya VTCY is also pledged to various financial institutions.

Vincent is reported as having direct control over approximately 11.97% of  Digi stock.A further 21% is controlled indirectly.

Telenor, his partner in Digi,  controls 33%.

Had the 6% held by Danaharta been sold to recover the loans Vincent cannot  service, Vincent would have lost control to Telenor.

The shareholdings are as at 8 August 2000. Since then, Berjaya shares have fallen in value, and presently trade at around RM 5.

Danaharta Urus has also intervened on Vincent's behalf to take control of 11.5% in Berjaya Group Bhd.

Danaharta Urus is obviusly holding the shares as a result of having assumed both a non-performing loan/s and the collateral. However, given Danaharta secrecy, the  loan amount cannot be confirmed.

It  is however on public record that Danaharta had assumed somewhere between RM 20-60 million, borrowed by Vincent's Sun Media Group S/B . Evidence can be found in the Gemtech Bhd announcement to the KLSE on its proposed acquisition of Sun Media.Vincent owns 60% of Sun MEdia, while Berjaya Group and BToto own another 25%.

Bilangan pembaca: orang


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