Restructuring galore

THE Asian monetary disaster in 1997-98 had wreaked havoc on Asian currencies and equities, together with Malaysia. With each monetary and company sectors in misery, banks needed to be recapitalised and saved liquid by eradicating non-performing loans, whereas corporates underwent restructuring.

Domestically, Danaharta and the Company Debt Restructuring Committee (CDRC) had been created by the federal government to rescue and restructure a number of corporations, which owned property thought-about to be strategic.

One which grabbed consideration was the restructuring of the now-defunct Renong group, which owned PLUS Expressways Bhd that operates the North-South Expressway (NSE) working the size of the Malaysian peninsula.

Renong was as soon as managed by Tan Sri Halim Saad till the federal government, through Khazanah Nasional Bhd, took over all its property in 2001.

Renong, through its subsidiary United Engineers (M) Bhd or UEM, had constructed the NSE within the Nineties beneath the build-operate-transfer mannequin with a useful increase from the federal government, which prolonged it a contentious RM1.6bil delicate mortgage. This was half of the whole projected development value of RM3.2bil. Upon completion, PLUS was given the duty to run and function the asset as a profit-making entity and confer the rights to gather toll.

Halim rode on this success to construct a conglomerate spanning many ventures from telecommunications to banking. Nevertheless, Renong additionally racked up money owed of over RM20bil, which left it prone to the Asian monetary disaster. The businessman was additionally saddled with a RM3.2bil put possibility he couldn’t fulfill.

After a number of failed restructuring makes an attempt, the federal government nationalised Renong, which was later privatised, reorganized and renamed UEM World Bhd.

The CDRC debt-restructuring scheme concerned the issuance of RM8.4bil of zero coupon bonds by PLUS. The company stated the debt restructuring represented a non-public sector answer with none monetary help from the federal government.

Given Renong’s enormous debt, the restructuring would additionally keep away from placing the native banking sector beneath stress. Whereas this can be true, the problem was how did the conglomerate chalk up that quantity of debt to start with?

One other massive company that was not spared the onslaught of the 1997–98 monetary disaster was the Lion Group.

The diversified group, which was the second-largest company debtor after Renong, undertook to restructure RM5.9bil of its complete debt burden of slightly below RM10bil. Below the plan, Lion’s native and international creditor banks, which numbered greater than 100, could be repaid with a mix of money, shares and bonds. Though the restructuring was outdoors the purview of the CDRC, the group had preliminary enter from the committee.

The diversified entity was flying excessive within the Nineties and had over-expanded too quick.

The group accomplished its restructuring in 2003, marking one of many final main company workout routines of corporations that had gotten into monetary problem because of the monetary disaster. Different main restructuring workout routines accomplished with the assistance of the CDRC included Johor Corp, the Titan Group and United Service provider Group Bhd.

The few that that restructured outdoors the purview of the CDRC embrace Land & Normal Bhd and Metroplex Bhd.


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