Thursday, June 7th, 2018
WASHINGTON, June 7 — US Commerce Secretary Wilbur Ross said today the government has reached a deal with ZTE Corp <000063.SZ> that reverses a ban on its buying parts from US suppliers, allowing China’s No 2 telecommunications equipment…
LONDON, June 7 — Sterling reversed earlier gains and fell a quarter of a per cent today as concerns about Brexit negotiations prompted investors to lock in gains after a recent rebound. The British currency had hit a two-week high in early…
PETALING JAYA: The lopsided terms in two gas piping projects worth RM9.4 billion, which raised eyebrows in the market, have never been seen in the corporate financing scene in Malaysia, industry players say.
“I've never heard of a project that was funded according to time scale. That's highly abnormal,” Proactive Consultancy Sdn Bhd consultant director Lee Keat Hin told SunBiz.
He said payments should only be made if the construction progress is able to meet the payment schedule.
“Why would the bank pay the contractor over 80% of contract value where only 13% work is done? Normally the banks will come and see the infrastructure projects, they have to make sure the work is done before they pay.
“Why would laying these pipes be so different from other similar projects? Can you imagine what will happen if the projects are abandoned after payments are made?” he asked.
The two projects are the 600km Multi-Product Pipeline (MPP) which connects Malacca and Port Dickson to Jitra, Kedah, and costs RM5.35 billion; and the 662km Trans-Sabah Gas Pipeline (TSGP) that runs from Kimanis Gas Terminal to Sandakan and Tawau, and costs about RM4.06 billion. Both projects are slated for completion in 2020.
A corporate finance head with a local bank, who declined to be named, concurred, saying the terms for the two deals are not within the norm.
“It's very exceptional, I'm also very curious as to how they can pay such a huge sum of money when the completion rate is so low. It's a red flag to me.
“The status of the progress needs to be certified by architects, so all these need to be in place for check-and-balance purposes before any money is drawn down,” he opined.
The experts said even payments for other big-scale infrastructure projects such as the Mass Rapid Transit and the Light Rail Transit are made according to construction progress, which should not be exceptionally practised.
The one-sided payment terms for the MPP and the TSGP projects surfaced after Finance Minister Lim Guan Eng revealed contents of “red files” which were protected by the Official Secrets Act. The agreements were signed under the previous government and awarded to China Petroleum Pipeline Bureau back in November 2016.
Some 88% of the contract value or RM8.25 billion was paid out despite only 13% of construction progress after work started in April 2017.
Former prime minister Datuk Seri Najib Abdul Razak, in response to the matter, said the projects were negotiated on a government-to-government basis but did not explain why such terms were made.
The Ministry of Finance (MoF) did not rule out the possibility of money-laundering activity, citing the connection between Suria Strategic Energy Resources (SSER), the MoF unit undertaking the two pipeline projects, with SRC International Bhd, which was a unit of debt-ridden 1Malaysia Development Bhd (1MDB).
Lim and Malaysia Anti-Corruption Commission officers will make a visit to China to uncover the truth behind the abnormal payment method as well as to trace the funds that flowed into China.
MoF also highlighted that SSER president Datuk Mohammed Azhar Osman Khairuddin is a director of Putrajaya Perdana Sdn Bhd, a company linked directly with Low Taek Jho, or better known as Jho Low, who has been summoned to assist in the 1MDB investigation.
WASHINGTON: US Commerce Secretary Wilbur Ross said today that Washington has reached a deal with ZTE Corp that would reverse a ban on buying parts from US suppliers, allowing China's No. 2 telecommunications equipment maker to get back into business.
Under the deal, ZTE will change its board and management within 30 days, pay a US$1 billion (RM3.97 billion) fine, put US$400 million in escrow and retain a new US-selected compliance team, Ross told CNBC.
He added that he did not think the arrangement would have any effect on tariff talks with China.
“We think this settlement, which brought the company, a US$17 billion company, to its knees, more or less put them out of business … should serve as a very strong deterrent not only for them but for other potential bad actors,” Ross told CNBC.
The deal also includes a suspended 10-year ban on buying US components that could be activated by any violations, people familiar with the arrangement told Reuters.
Reuters reported exclusively on Tuesday that ZTE had signed a preliminary agreement with the US Commerce Department, along with the fine and other terms.
ZTE ceased major operations since the seven-year ban was imposed on the company in April for breaking a 2017 agreement that was reached after it was caught illegally shipping goods to Iran and North Korea.
ZTE's survival has been a topic of discussion in high-level US-China trade talks.
US President Donald Trump met with his trade advisers on Tuesday to discuss China's offer to import an extra US$70 billion of American goods over a year in hopes of defusing a potential trade war between the world's two largest economies.
Ross said on Sunday he had been having frank, useful talks in China about exports, as Washington presses its message to Beijing about structural economic changes amid the festering trade dispute.
OTTAWA, June 7 — The other leaders of G7 nations must not be afraid to reach agreements without US President Donald Trump at their upcoming summit, though unanimity is always preferred, French President Emmanuel Macron said today. “The G7 is an…
PETALING JAYA: HSS Engineers Bhd’s associate HSS Integrated Sdn Bhd (HSSI) has received a termination letter for its role as the independent consultant engineer for the Mass Rapid Transit Line 3 (MRT3) project.
It said HSSI had on June 7 received a 30-day written notice from MRT Corp Sdn Bhd terminating the contract following the government’s decision not to proceed with the project.
HSS does not foresee any significant impact on its operations and financials given that only preliminary works have commenced this far, which will be compensated for in accordance with the terms and conditions of the contract.
Its shares fell 2 sen or 3% to close at 65 sen today on some 7.09 million shares done.
PETALING JAYA: CCM Duopharma Biotech Bhd has secured US$20 million (RM79.4 million) financing from Oversea-Chinese Banking Corporation (Labuan Branch).
It told Bursa Malaysia that the revolving credit-i Murabahah will be used to fund the RM59.16 million acquisition of an 8.39% stake in PanGen Biotech Inc from Chemical Company of Malaysia Bhd.
“Apart from that, the facility will be utilised for general working capital requirement and other investments.”
CCM said its gearing ratio will increase from 0.27 times to 0.39 times for the financial year ending Dec 31 should the loan be fully drawdown by Dec 31.
CCM shares gained 2 sen or 0.6% to close at RM3.40 today on some 307,100 shares done.
WASHINGTON, June 7 — US Commerce Secretary Wilbur Ross said today that Washington has reached a deal with ZTE Corp that would reverse a ban on buying parts from US suppliers, allowing China’s No 2 telecommunications equipment maker to get back…
PETALING JAYA: Straits Inter Logistics Bhd plans to acquire a 55% stake in oil bunkering services company Tumpuan Megah Development Sdn Bhd for RM35.75 million to expand its business.
In a filing with Bursa Malaysia today, Straits Inter said it had entered into a conditional share sale agreement with the vendor, Raja Ismail Raja Mohamed.
Straits Inter will pay RM7.80 million cash and RM27.95 million worth of new shares in Straits Inter at an issue price of 24 sen per Straits Inter share.
The acquisition comes with an aggregate profit guarantee totalling RM10 million by the vendor for two financial years ending Dec 31, 2019 and 2020. Based on the 55% stake, the company will be entitled to a yearly profit guarantee of about RM2.75 million for each financial year.
“The board of Straits applauded the proposed acquisition of 55% in Tumpuan Megah, which has similar core business activities as Straits. The total profit guarantee also provides assurance on the earnings potential of Tumpuan Megah, which is expected to contribute positively to the future profitability of Straits on a consolidated basis,” Straits Inter group managing director Datuk Seri Ho Kam Choy said in a statement.
He said the proposed acquisition is a horizontal acquisition by Straits Inter to acquire its peer with the intention to expand its existing business activities of bunkering services and oil trading, which is expected to enhance the revenue and earnings of Straits Inter and its subsidiaries moving forward.
“The proposed acquisition would enable Straits to have an immediate expansion in respect of its fleet size and assets base from the current two vessels to nine vessels for its operations. With such expansion of asset base, Straits is capable to undertake higher volume of bunkering services, thereby increase its operational capacities,” he added.
Tumpuan Megah currently has its operations in eight ports in Malaysia, all of which are licensed under Petroleum Development Act 1974. It carries out its bunkering services in Malaysia via its seven vessels.
Based on the past three financial years up to Dec 31, 2016, Tumpuan Megah recorded a revenue of about RM215.44 million, RM154.89 million and RM148.69 million respectively. Its net profit was about RM3.16 million, RM1.02 million and RM960,000 for the same period respectively.