Repco Holdings Berhad: submerged in debts just like the land it bought
Monday, January 10, 2005
MALAYSIA TODAY - SPECIAL REPORT
In the west, you need to go to Harvard to succeed in business. In Malaysia, you need to join Umno or one of its coalition partners in Barisan Nasional. If you are Chinese and you are not eligible to join Umno, then you do the next best thing, you buy an Umno Chief Minister. And many a Chinese businessman has seen rags-to-riches after buying an Umno Minister.
In Terengganu, one well-known local Chinese, Dato Yong, saw success when he bought Wan Mokhtar Ahmad, the Chief Minister who was ‘retired’ by PAS in 1999. Dato Yong’s company, Sri Terukon, practically monopolised all government contracts, big and small -- mostly negotiated without tender at twice or triple the budgeted price.
Incidentally, Wan Mokhtar, who is now an ambassador in the Middle East, is an Ulamak (Islamic scholar) and he would baca doa (read the prayer) at every Umno General Assembly. Dato Yong, in turn, was banished to Terengganu under restricted residence status for his underworld activities before becoming Wan Mokhtar’s business partner.
Pahang had its Dato Wong, dubbed Tengku Wong, who was Chief Minister Khalil Yaacob’s business partner. And what do Dato Yong of Terengganu and Dato Wong of Pahang share in common? They both made their millions from timber concessions.
Terengganu and Pahang are not isolated cases though. Every state in Malaysia, except for maybe Kelantan, has their Chinese tycoons backed by a Malay Chief Minister and they all make their millions by ripping off the state, in particular the state’s timber resources. And Sabah too is not exempted. But the Sabah experience is probably more interesting compared to those ‘dull’ stories of the other states.
Take the story of Repco Holdings Berhad as an example. It is not only a rags-to-riches story but a saga of rags-to-riches-to-rags-again. Repco, which rapidly became the darling of the stock market, was propelled from nothing to a ‘paper worth’ of RM2 billion, then to nothing again.
And this is the story of Repco Holdings Berhad, which is nothing but a story of asset manipulation and rigging of share prices on the stock market.
In September 1999, the Securities Commission charged Low Thiam Hock, Repco’s executive chairman, for allegedly rigging the share prices on the stock market. That same year, Repco was taken over by the national debt restructuring agency, Pengurusan Danaharta Nasional Bhd, when it defaulted on its RM340 million loan repayments to Sime Bank. Danaharta then appointed PricewaterhouseCoopers to manage the affairs of the company.
Repco is now in the process of being wound up by Danaharta. Its share price, which saw a high of RM140.50 per share in September 1997, is now worthless. Repco owes Danaharta RM260 million while its total liabilities are RM607 million against total assets of only RM185 million.
This RM260 million owing to Danaharta is only a small portion of its total liabilities of RM607 million. Therefore, even if Danaharta does recover its RM260 million from the sale of Repco’s assets and investments, the creditors would still have to take a loss of RM347 million. Chances are, Danaharta’s ‘investment’ in Repco will be included in the RM3 billion that the national debt restructuring agency will be writing off as ‘bad debts’.
Yes, RM3 billion! A lot of money isn't it? And it's all our money mind you, taxpayers' money.
As at year end December 2004, Repco’s accumulated loss stood at RM448 million, wiping out its share capital entirely; which is a miniscule 14,254,002 shares at RM1.00 per share -- out of which only 8,354,002 shares or RM8,354,002 was paid for in cash.
Innosabah Nominees, Mayban Nominees, Affin Nominees, Alliancegroup Nominees, HSBC Nominees, OSK Nominees, and the many more that hold an interest in Repco, would have to be prepared to write off their now worthless investment as well because the shareholders are always the last to be paid in such an exercise.
Do you by any chance also hold shares in Repco? If you do, then tough luck!
Repco is not a dormant company though as it still has some ongoing business operations in Sabah. Its core business is four-digit betting (gambling) and timber (as usual) which brings in profits of about RM10 million each. Its ‘original’ business, automotive parts, however, is not profitable and is just breaking even. At the end of last year, Repco saw a loss of RM40 million against a turnover of RM124 million.
And they say timber and gambling are licences to print money!
They also say: if you owe the bank one million then it is your problem. But if you owe the bank 600 million then it is the bank’s problem. Repco owes the banks 600 million so the two directors Tan Kee Huat of Kuala Lumpur and Sukumaran K. Vanugopal of Kota Kinabalu need not lose any sleep over the matter.
Note that: amongst those who stand to see their investment in Repco getting wiped out is Innosabah. And note our earlier Special Report, (Atlantis: Sabah’s proposed new city below the sea), where Innosabah played a crucial role in the 0.971 hectare land held under Kota Kinabalu Town Lease No 017538788.
In 1992, a company called Elite Consortium Sdn Bhd brought the 0.971 hectare land from Permodalan Sabah Berhad for RM3.5 million. After paying only RM200,000 upfront, it defaulted on the balance.
In December 1993, Elite Consortium charged the land to Bank Bumiputera as security for a RM18 million loan arranged by Innosabah.
Subsequently, the land, which was actually underwater, was sold to Repco for a price of RM20 million after which the land was then charged to MBF for a loan of RM131 million.
The land, now owned by Pengkalen Industrial Holdings Berhad, still lies underwater.
You can certainly do things in Sabah that would be unheard of in other parts of Malaysia. As they say, know-who and not know-how is the secret formula for success in the Malaysian corporate world. And, with the right know-who, even a piece of land below the sea can be sold for a large sum of money after which you just walk away and let the Malaysian government worry about how to repay the loan.
But hold on! Is not the government’s money also the Malaysian taxpayers' money? Well, now you know where your tax Ringgit is going to. Only in Malaysia can we do this. Oooo...I just love this country.
MALAYSIA TODAY - SPECIAL REPORT
In the west, you need to go to Harvard to succeed in business. In Malaysia, you need to join Umno or one of its coalition partners in Barisan Nasional. If you are Chinese and you are not eligible to join Umno, then you do the next best thing, you buy an Umno Chief Minister. And many a Chinese businessman has seen rags-to-riches after buying an Umno Minister.
In Terengganu, one well-known local Chinese, Dato Yong, saw success when he bought Wan Mokhtar Ahmad, the Chief Minister who was ‘retired’ by PAS in 1999. Dato Yong’s company, Sri Terukon, practically monopolised all government contracts, big and small -- mostly negotiated without tender at twice or triple the budgeted price.
Incidentally, Wan Mokhtar, who is now an ambassador in the Middle East, is an Ulamak (Islamic scholar) and he would baca doa (read the prayer) at every Umno General Assembly. Dato Yong, in turn, was banished to Terengganu under restricted residence status for his underworld activities before becoming Wan Mokhtar’s business partner.
Pahang had its Dato Wong, dubbed Tengku Wong, who was Chief Minister Khalil Yaacob’s business partner. And what do Dato Yong of Terengganu and Dato Wong of Pahang share in common? They both made their millions from timber concessions.
Terengganu and Pahang are not isolated cases though. Every state in Malaysia, except for maybe Kelantan, has their Chinese tycoons backed by a Malay Chief Minister and they all make their millions by ripping off the state, in particular the state’s timber resources. And Sabah too is not exempted. But the Sabah experience is probably more interesting compared to those ‘dull’ stories of the other states.
Take the story of Repco Holdings Berhad as an example. It is not only a rags-to-riches story but a saga of rags-to-riches-to-rags-again. Repco, which rapidly became the darling of the stock market, was propelled from nothing to a ‘paper worth’ of RM2 billion, then to nothing again.
And this is the story of Repco Holdings Berhad, which is nothing but a story of asset manipulation and rigging of share prices on the stock market.
In September 1999, the Securities Commission charged Low Thiam Hock, Repco’s executive chairman, for allegedly rigging the share prices on the stock market. That same year, Repco was taken over by the national debt restructuring agency, Pengurusan Danaharta Nasional Bhd, when it defaulted on its RM340 million loan repayments to Sime Bank. Danaharta then appointed PricewaterhouseCoopers to manage the affairs of the company.
Repco is now in the process of being wound up by Danaharta. Its share price, which saw a high of RM140.50 per share in September 1997, is now worthless. Repco owes Danaharta RM260 million while its total liabilities are RM607 million against total assets of only RM185 million.
This RM260 million owing to Danaharta is only a small portion of its total liabilities of RM607 million. Therefore, even if Danaharta does recover its RM260 million from the sale of Repco’s assets and investments, the creditors would still have to take a loss of RM347 million. Chances are, Danaharta’s ‘investment’ in Repco will be included in the RM3 billion that the national debt restructuring agency will be writing off as ‘bad debts’.
Yes, RM3 billion! A lot of money isn't it? And it's all our money mind you, taxpayers' money.
As at year end December 2004, Repco’s accumulated loss stood at RM448 million, wiping out its share capital entirely; which is a miniscule 14,254,002 shares at RM1.00 per share -- out of which only 8,354,002 shares or RM8,354,002 was paid for in cash.
Innosabah Nominees, Mayban Nominees, Affin Nominees, Alliancegroup Nominees, HSBC Nominees, OSK Nominees, and the many more that hold an interest in Repco, would have to be prepared to write off their now worthless investment as well because the shareholders are always the last to be paid in such an exercise.
Do you by any chance also hold shares in Repco? If you do, then tough luck!
Repco is not a dormant company though as it still has some ongoing business operations in Sabah. Its core business is four-digit betting (gambling) and timber (as usual) which brings in profits of about RM10 million each. Its ‘original’ business, automotive parts, however, is not profitable and is just breaking even. At the end of last year, Repco saw a loss of RM40 million against a turnover of RM124 million.
And they say timber and gambling are licences to print money!
They also say: if you owe the bank one million then it is your problem. But if you owe the bank 600 million then it is the bank’s problem. Repco owes the banks 600 million so the two directors Tan Kee Huat of Kuala Lumpur and Sukumaran K. Vanugopal of Kota Kinabalu need not lose any sleep over the matter.
Note that: amongst those who stand to see their investment in Repco getting wiped out is Innosabah. And note our earlier Special Report, (Atlantis: Sabah’s proposed new city below the sea), where Innosabah played a crucial role in the 0.971 hectare land held under Kota Kinabalu Town Lease No 017538788.
In 1992, a company called Elite Consortium Sdn Bhd brought the 0.971 hectare land from Permodalan Sabah Berhad for RM3.5 million. After paying only RM200,000 upfront, it defaulted on the balance.
In December 1993, Elite Consortium charged the land to Bank Bumiputera as security for a RM18 million loan arranged by Innosabah.
Subsequently, the land, which was actually underwater, was sold to Repco for a price of RM20 million after which the land was then charged to MBF for a loan of RM131 million.
The land, now owned by Pengkalen Industrial Holdings Berhad, still lies underwater.
You can certainly do things in Sabah that would be unheard of in other parts of Malaysia. As they say, know-who and not know-how is the secret formula for success in the Malaysian corporate world. And, with the right know-who, even a piece of land below the sea can be sold for a large sum of money after which you just walk away and let the Malaysian government worry about how to repay the loan.
But hold on! Is not the government’s money also the Malaysian taxpayers' money? Well, now you know where your tax Ringgit is going to. Only in Malaysia can we do this. Oooo...I just love this country.
posted by Gundohing at
10:02 PM
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