Tycoon Tajudin Ramli's business empire crumbled today as the state debt restructuring agency Danaharta sold his 13.1 percent stake in the country's second biggest mobile phone operator to Telekom Malaysia.

Pengurusan Danaharta Nasional said in a statement it had disposed of 260.87 million shares - pledged as loan collateral by Tajudin - in telecoms firm Technology Resources Industries (TRI) for RM2.75 ringgit (72 US cents) a share or a total RM717.39 million.

Danaharta also invited bids for Tajudin's stake of about 45 percent, or 309.65 million shares, in his cash-rich aviation firm Naluri Bhd.

The move came after Tajudin missed Friday's deadline to make a RM130.44 million payment to Danaharta under TRI's ongoing debt restructuring plan.

"As such, Danaharta has exercised its rights to foreclose on the shares pledged for (Tajudin's) loan," the agency said.

Increasing exposure

Danaharta did not disclose the buyer of the TRI stake but state-owned Telekom issued a separate statement saying it had bought the block to raise its interest in TRI to 15.6 percent.

"The acquisition provides Telekom with an opportunity to increase its exposure to the cellular industry," Telekom added.

The TRI and Naluri shares were held as collateral by Danaharta against Tajudin's personal debts of RM1.32 billion which went sour during the Asian financial crisis.

TRI, which owns Malaysia's second-largest cellular phone operator, and Naluri are the last bastions of Tajudin's business empire after he exited from loss-making Malaysia Airlines last year.

He controversially sold his airline stake back to the government at more than twice the prevailing market price in a deal seen as a bail-out.

End of the game

A senior analyst said Tajudin was the last to fall from grace amongst a coterie of high-profile ethnic Malay businessmen linked to former Finance Minister Daim Zainuddin who quit last June amid talks of a rift with Prime Minister Dr Mahathir Mohamad.

"This is definitely the end of the game for Tajudin," said the analyst.

"It's a very high profile break from the past."

A research manager said the deal was beneficial in the long-term because it would help consolidate the telecommunications industry.

But how Telekom assimilated the TRI operations remained to be seen, he told AFX-Asia , an AFP -owned financial news wire.

The news weakened sentiment on the stock market, which fell 1.2 percent at the close of Monday morning session.

An institutional dealer said the price per share of RM2.75 paid by Telekom was deemed too expensive as it could have bought the shares more cheaply on the open market.

"The perception is that Telekom is paying a premium in the short term... investors see this as some sort of bail-out and this explains why the whole market came down further after that," he said.

Trading suspended

Other analysts said Telekom could inject its cellular arm into Celcom to compete with the country's biggest mobile phone operator Maxis, and may seek to increase its stake in TRI.

Telekom shares fell 30 sen to RM9.70 before trading was suspended at mid-morning Monday. TRI on the other hand, rose RM0.08 to RM2.54 before it too was suspended. Both stocks are due to resume trade Tuesday.

Naluri added 15 sen to RM1.39 at the close of trade amid hopes that the sale of Tajudin's stake would bring in a new owner who could boost the company's fortunes, dealers said.