Sens and insensibility of MAS buy

SW Chan

Modified 29 Jan 2008, 10:21 am

Firstly, we should call it a Naluri bailout rather than a MAS bailout.

MAS' shares may be valued at RM8 per share, but when? Are we aiming at 2020? MAS has never reached that price through public listings.

MAS' financial results are in the red and will be so for another few years. On top of that, there is additional restructuring cost in trying to rejuvenate the company back to profitability.

The RM8 per share paid to Naluri not only absolved it of all its MAS debts but also gave it profits close to RM1 billion. This money could have been better used to ease MAS' debts so that it may even see profits earlier before 2020. They are plenty of counters on Nasdaq, but would our government consider buying any one for MSC at year 2000 prices? Isn't the exorbitant price evaluation a case of poor business ethics?

Let's say, however, that MAS is really a good asset and is highly placed by many investors. Earlier, Naluri bought MAS at a higher price using similar principles as given by MOF for its RM8 per share deal. Rightly, Naluri shouldn't have bought MAS because it was still an overpriced asset. However, it did, and took over the airline, hoping to reap the benefits - described as potential prime assets by MOF - but failing badly until incurring heavy losses. Naluri purchased MAS because it could secure bonds based on government guarantee. If MAS really was so good, why can't Naluri hold on to it and sell it to another company that can pay higher than the price offered by MOF? Didn't Naluri learn any of the Renong tactics - holding on to good assets that went bankrupt by taking put options, new listings, etc?

Everybody is asking, what is so special about Naluri. Why at RM8 per share and not RM4 per share (the price Brunei got for its stake in MAS around the same time)? Instead of making money from MAS (a blue chip) Naluri failed and incurred heavy losses instead.

Is the government trying to show the people that it can use affirmative action against selected people who failed, by giving them cash awards? We have seen so many mergers in the country and changing of shareholders but nothing shocks so much as this exorbitant, overpriced, bailout scheme to evaluate the price of purchase. Arguably, there are so many non-performing loan with assets worth 10 times the current value in the long term, but all have been taken over by Danaharta without the latter having to pay 10-fold for them. Why doesn't Danaharta apply MOF's 'principles', too, and pay everybody more?

MOF can say whatever it wants, but at the end of the day, it was a favoured purchase by MOF at a silly price; earlier, too, Naluri bought at another similarly silly price.

Something seems fishy here - like the government using Naluri to get huge loans based on inflated prices and on government guarantee, and later retire these loan losses using public funds.

Is this a new trend - using any good national company's identity as proxy for bad business by incurring huge loans while getting enriched and later using public funds to retire their losses in a patriotic call to save the national company?

After such extensive road infrastructure has been built in Peninsular Malaysia, do we need domestic flights here just for government officials, politicians and royalty? MAS has upgraded so many 737-400 for the domestic market in the peninsula, but where are the passengers?

The question is, who will MOF bail out next? Telekom, Renong or Naluri?

Lastly, I want to add that the best ever Malay entrepreneur, in my opinion, is the late Yahya Ahmad from DRB-Hicom. I think most Malaysians still miss him.