Monday, November 6th, 2017

 

UMW Oil & Gas takes on US$550m syndicated credit facilities

PETALING JAYA: UMW Oil & Gas Corp Bhd (UMW OG), through wholly owned subsidiaries Sumber Ribu Sdn Bhd and Sumber Wang (L) Ltd, has entered into a common terms agreement for syndicated facilities of US$550 million (RM2.3 billion).

Sumber Ribu has entered into a US dollar (USD) commodity murabahah revolving credit facility-i of US$110 million and a ringgit (RM) commodity murabahah revolving credit facility-i of RM110 million, with an option to upsize the RM Islamic revolving facility by RM90 million.

Proceeds from the facilities will be used to refinance existing working capital and similar indebtedness; for working capital; and payment of expenses for the exercise.

UMW OG also entered into a USD Islamic trade facility of US$47 million and, to the extent any financier is unable to participate in the USD Islamic trade facility, a USD conventional trade facility, and a RM Islamic trade facility of RM15 million and, to the extent any financier is unable to participate in the RM Islamic trade facility, an RM conventional trade facility.

The proceeds will be used for working capital, as well as hedging arrangements related to operations.

The tenure of the revolving facilities is up to 10 years, comprising an initial firm period of three years and annual renewal thereafter.

Meanwhile, Sumber Wang (L) Ltd entered into a five-year USD commodity murabahah term financing facility-i of US$145 million and a 10-year USD commodity murabahah term financing facility-i of US$220 million.

The proceeds will be used to refinance borrowings to ensure that the maturity profile of the relevant facilities better match the long-term useful life of its assets; and the payment of costs and expenses and hedging arrangements of the facilities.

Approval for the facilities has been obtained from Bank Negara Malaysia. Shareholders’ approval is not needed.


Nexgram chairman, deputy chairman resign

PETALING JAYA: Nexgram Bhd saw a double resignation, with both its chairman and deputy chairman calling it quits.

Executive director Datuk Ir Lim Siang Chai, who was appointed to the board on Oct 12, has been redesignated as chairman.

In a filing with Bursa Malaysia today, the company announced that its chairman Datuk Seri Wira Ayub Yaakob 63, and deputy Norzain Abdul Wahab, 51 had resigned from their respective positions.

They cited their intention to pursue their personal interests and goals as the reason for their resignations, and denied there was any disagreement with other board members.

Lim who formerly served in the Cabinet in the capacity of deputy minister in various ministries, is also the chairman of Jiankun International Bhd and substantial shareholder of Ire-Tex Corp Bhd. He joined the board along with independent non-executive director Zaharin Ahmad Zamani, who became chairman of the nomination committee.


US stocks mostly flat investors eye earnings, GOP tax plan

NEW YORK, Nov 6 — Wall Street treaded water at the open today as investors digested a flurry of political and corporate news, with the arrest of a Saudi royal also rattling markets. The cautious open follows Friday’s trifecta of record…


Key US Fed official announces early retirement

WASHINGTON, Nov 6 — The influential and longstanding head of the New York Federal Reserve Bank announced today he will retire in mid-2018, six months before his term expires. The departure of William Dudley could further change the complexion…


SC plans registration of cryptocurrency exchanges

KUALA LUMPUR: The Securities Commission (SC) Malaysia is in consultation with global regulators, looking at recent developments and different approaches taken by its counterparts, to establish a framework for the registration of cryptocurrency exchanges by year-end.

SC chairman Tan Sri Ranjit Ajit Singh said there have been discussions on cryptocurrency and it is well aware of it, at both domestic and global levels.

“We will have the appropriate regulatory posture around the cryptocurrency segment and look at what’s the appropriate framework that may allow the registration of some qualified cryptocurrency exchanges,” he told a press conference at the SCxSC Digital Finance Conference 2017 today.

He said the SC is currently working on the framework and wants to take advantage of discussions taking place at global regulators’ level. Chinese authorities have shut down cryptocurrency exchanges and banned funding for initial coin offerings. 

“There are different positions that have been taken by different regulators around the world. We want to be able to make sure that we’ve considered those developments. There’s a recent consultation network that’s been set up among the global regulators and we’re part of that.

“We want to first look at what positions are there, at the same time, we’re working closely with Bank Negara Malaysia to see what framework we will apply.”

Ranjit said the SC is in charge of the secondary market and its position on cryptocurrency trading will be to craft regulations so that these trading values have the right conditions in place for market integrity as well as for investor protection purposes.

The dominant cryptocurrency, bitcoin, has reached new heights in recent days bolstered by new regulation out of the US and Japan which looks to curb manipulation and limit supply of new coin offerings and CME Group’s, the world’s leading and most diverse derivatives marketplace, expected launch of bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods.

One bitcoin was trading at US$7,318.19 at the time of writing.

Ranjit also announced measures to liberalise Malaysia’s RM1.3 trillion bond and sukuk market by the first quarter of 2018 for retail participation. This involves reviewing the primary market issuance processes and disclosure requirements, as well as expanding the range of corporate bonds and sukuk offered to retail investors.

It also launched a centralised bond and sukuk information platform known as BIX (Bond+Sukuk Information Exchange) to provide easier access and comprehensive information on corporate bond and sukuk.

The equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms have funded 450 campaigns, raising a total of RM50 million to meet the financing needs of micro, and small and medium enterprises.

The SC introduced ECF in 2015 to provide early-stage financing for start-up entrepreneurs while the P2P financing framework, introduced in April 2016, aims to address funding needs of SMEs to raise working capital or capital for growth.

Second Finance Minister Datuk Johari Abdul Ghani said the government will establish a co-investment fund with RM50 million from existing grants to be co-invested in SMEs with private investors through ECF and P2P platforms.

He said the SC will assist in setting up the fund, and defining the co-investment criteria for both equity and debt-based financing. Once the fund is operationalised, it will co-invest in ECF and P2P financing campaigns ,which have managed to attract the required amount of private funding and other criteria.


SC: Cryptocurrency register in the works

KUALA LUMPUR: The Securities Commission (SC) Malaysia is in consultation with global regulators, looking at recent developments and different approaches taken by its counterparts, to establish a framework for the registration of cryptocurrency exchanges by year-end.

SC chairman Tan Sri Ranjit Ajit Singh said there have been discussions on cryptocurrency and it is well aware of it, at both domestic and global levels.

“We will have the appropriate regulatory posture around the cryptocurrency segment and look at what’s the appropriate framework that may allow the registration of some qualified cryptocurrency exchanges,” he told a press conference at the SCxSC Digital Finance Conference 2017 today.

He said the SC is currently working on the framework and wants to take advantage of discussions taking place at global regulators’ level. Chinese authorities have shut down cryptocurrency exchanges and banned funding for initial coin offerings. 

“There are different positions that have been taken by different regulators around the world. We want to be able to make sure that we’ve considered those developments. There’s a recent consultation network that’s been set up among the global regulators and we’re part of that.

“We want to first look at what positions are there, at the same time, we’re working closely with Bank Negara Malaysia to see what framework we will apply.”

Ranjit said the SC is in charge of the secondary market and its position on cryptocurrency trading will be to craft regulations so that these trading values have the right conditions in place for market integrity as well as for investor protection purposes.

The dominant cryptocurrency, bitcoin, has reached new heights in recent days bolstered by new regulation out of the US and Japan which looks to curb manipulation and limit supply of new coin offerings and CME Group’s, the world’s leading and most diverse derivatives marketplace, expected launch of bitcoin futures in the fourth quarter of 2017, pending all relevant regulatory review periods.

One bitcoin was trading at US$7,318.19 at the time of writing.
Ranjit also announced measures to liberalise Malaysia’s RM1.3 trillion bond and sukuk market by the first quarter of 2018 for retail participation. This involves reviewing the primary market issuance processes and disclosure requirements, as well as expanding the range of corporate bonds and sukuk offered to retail investors.

It also launched a centralised bond and sukuk information platform known as BIX (Bond & Sukuk Information Exchange) to provide easier access and comprehensive information on corporate bond and sukuk.

The equity crowdfunding (ECF) and peer-to-peer (P2P) financing platforms have funded 450 campaigns, raising a total of RM50 million to meet the financing needs of micro, and small and medium enterprises.

The SC introduced ECF in 2015 to provide early-stage financing for start-up entrepreneurs while the P2P financing framework, introduced in April 2016, aims to address funding needs of SMEs to raise working capital or capital for growth.

Second Finance Minister Datuk Johari Abdul Ghani said the government will establish a co-investment fund with RM50 million from existing grants to be co-invested in SMEs with private investors through ECF and P2P platforms.

He said the SC will assist in setting up the fund, and defining the co-investment criteria for both equity and debt-based financing. Once the fund is operationalised, it will co-invest in ECF and P2P financing campaigns ,which have managed to attract the required amount of private funding and other criteria.


Petronas-Saudi Aramco deal on Rapid on track

KUALA LUMPUR: Petroliam Nasional Bhd’s (Petronas) deal with Saudi Aramco on the Refinery and Petrochemical Integrated Development (Rapid) project in Johor is still on, according to Second Finance Minister Datuk Seri Johari Abdul Ghani.

“There is no major part (technical issue). That’s a normal negotiation. We’re almost there (completing the deal),” Johari told reporters after opening a conference today.

It was reported that Petronas and Aramco are facing ”technical issues” in finalising the Saudi oil major’s US$7 billion (RM29.6 billion) investment in the refinery project.

Saudi Aramco had in February, during Saudi King Salman’s visit to Malaysia, agreed to buy a US$7 billion stake in the Rapid project in Johor.

On the recent contradictory statements on the compensation for the abolishment of tolls on four highways from next year, Johari explained that he initially did not have a full picture of how long the concessions were and thought that some of them would expire in one or two years’ time.

“But all tolls (concessions) in PLUS are actually expiring in 2038. I thought some of that still have one or two years, so maybe can consider that (no compensation). But now, no choice. The government has to pay. Just for the rakyat, we will have to pay,” said Johari. – by Ee Ann Nee


MBSB to acquire Islamic lender Asian Finance Bank for RM645m

PETALING JAYA: Malaysia Building Society Bhd (MBSB) proposes to acquire the entire stake in Asian Finance Bank Bhd (AFB) for RM644.95 million in cash and shares, to create the country’s second largest Islamic bank with total assets of RM48 billion.

MBSB will convert all its conventional assets and liabilities to be syariah-compliant in order to inject into Islamic bank AFB.
The non-bank financial provider will pay for the deal with a combination of RM396.89 million cash and the issuance of 225.51 million new MBSB shares at an issue price of RM1.10 per share. The cash sum will be internally generated.

MBSB told Bursa Malaysia in a filing today that it had entered into a conditional share purchase agreement with the shareholders of AFB, namely Qatar Islamic Bank (66.67% equity interest), Financial Assets Bahrain WLL (6.67%), RUSD Investment Bank Inc (16.67%) and Tadhamon International Islamic Bank (10%).

The cash and shares options were derived from the valuations of 1.2 times and 1.5 times respectively, of the agreed net assets of the AFB of RM496.12 million as at Dec 31, 2017.

The issue price of the new shares represents a discount of about 1.12% to the five-day volume weighted average price of RM1.1125, up to its last trading day on Nov 3, 2017.

MBSB’s largest stakeholder, the Employees Provident Fund (EPF), will see its stake diluted from 65.56% to 63.16%, while second largest shareholder Tan Sri Chua Ma Yu’s equity interest will be reduced from 8.78% to 8.45%. Meanwhile, the vendors of AFB will collectively own a 3.66% stake in MBSB.

“The merged entity is expected to leverage on the strength of MBSB’s business, and the banking licenCe held by AFB is anticipated to provide a unique opportunity for the merged entity to emerge as a full-fledged Islamic banking franchise in Malaysia,” MBSB said.

Given that syariah-compliant financing is expected to account for 40% of total financing in Malaysia by 2020, the creation of an Islamic bank would provide MBSB the opportunity to participate in the growth of Islamic banking, locally and internationally, it added.

AFB, a full-fledged Islamic bank that was incorporated in Nov 28, 2005, has a branch each in Kuala Lumpur and Johor Baru as well as a representative office in Jakarta, Indonesia, its website shows.

Its net profit jumped almost seven times to RM3.65 million for the financial year ended Dec 31, 2016 from RM527,000 a year ago.The deal is expected to be completed by the first quarter of 2018.

Trading in MBSB shares will resume tomorrow.


Toyo Ink enters new memorandum of agreement for Vietnam power plant project

PETALING JAYA: Toyo Ink Group Bhd has entered into a new memorandum of agreement (MOA) with the Department of Natural Resources and Environment of Hau Giang Province (Hau Giang DONRE) for the development of a power plant project in Vietnam.

In a filing with Bursa Malaysia, the company said it had entered the new MOA on Oct 27, 2017 with revised terms and conditions of the land lease agreement (LLA). The new MOA replaces the earlier MOA dated Jan 16, 2017.

The MOA is in relation to the LLA for the development on a fast track basis of the Song Hau 2 – 2×1000 MW coal-fired thermal power plant project in Hau Giang Province, Vietnam.

Toyo Ink said it will use commercially reasonable efforts to reach agreements on all outstanding terms and issues relating to the build-operate-transfer (BOT) contract and the power purchase agreement (PPA) in good faith and as soon as possible. It estimates that this can be completed by August 2018.

Hau Giang DONRE will also use commercially reasonable efforts to accommodate certain changes raised by international lenders in the LLA, which are standard and usual for this type of non-recourse financing and are in accordance with the laws of Vietnam.

Both parties will, to their best efforts, make changes to the LLA in order to make it consistent with the BOT contract and the PPA, after the BOT contract and PPA are finalised.

The new MOA will be effective on the date of its execution and will continue in effect until Aug 31, 2018 or the date of signing of the BOT contract, whichever date is earlier.

Toyo Ink's share price rose 6.25% or 4 sen to close at 68 sen with a total of 10,000 shares traded, giving it a market capitalisation of RM72.76 million.


Compensation for EDL to be neutral on MRCB’s net present value: KAF Research

PETALING JAYA: The compensation for the abolishment of toll collection on the Eastern Dispersal Link (EDL) will have a neutral impact on Malaysian Resources Corp Bhd’s (MRCB) net present value (NPV) and may even reignite divestment plans for EDL.

“We believe the impact on MRCB will at the very least be NPV neutral, given the need to uphold the sanctity of the existing EDL concession. In fact, this may reignite MRCB’s divestment plans for EDL, in our view,” said KAF Research in its report.

The EDL concession (net of debt) contributes about 1 sen or less than 1% of group net asset value (NAV). KAF Research maintained its “buy” recommendation on MRCB with an unchanged target price of RM1.26 (15% discount to NAV).

According to news reports, the government will compensate PLUS Malaysia Bhd and MRCB for the abolishment of toll collection, which was announced under Budget 2018.

The four locations involved in the abolishment are Batu Tiga, Sg. Rasau in Selangor, Bukit Kayu Hitam in Kedah and the EDL. MRCB owns and operates EDL while the rest are under PLUS.

It is understood that the government is looking at RM102 million annually to compensate PLUS for scrapping the Batu Tiga and Sg. Rasau tolls, and RM8 million a year for Bukit Kayu Hitam.

“As for EDL, MRCB would be compensated for the loss of toll revenue once tolling is scrapped from Jan 1, 2018. To recap, the EDL has been a drag on MRCB’s earnings and constitutes about 30% of its total debt as of June 30 per our estimates,” said KAF Research.

The toll charge at EDL is RM6.80 per trip and the EDL concession runs for a period of 34 years.

Prior to the toll abolishment, the average daily traffic for EDL fell 6.6% to 39,264 for year-to-date-April 2017 following an increase in road charges on both sides of the Malaysia-Singapore causeway. Total traffic for 2017 is projected to fall 10%.

“Due to the cash flow mismatch between its toll collection and debt obligations, a July report by RAM Ratings indicated that MRCB has injected RM58 million into EDL for the past two years. On June 21, it pumped in another RM67 million to repay its concession unit’s term loans,” said KAF Research.

Apart from cash compensation, the research house noted that the government had on previous occasions lengthened the concession period of other toll concessionaires in return for stopping scheduled toll hikes.

However, it is unsure how EDL would be restructured, given that it is a one-way toll for motorists entering Singapore through the Customs, Immigration and Quarantine centre at the Malaysia-Singapore causeway from the Pandan Interchange along the North South Expressway in Johor.