Business Times Singapore, 12 Feb 2000

KL exchange silent as deadline for reply to Clob offer passes By Eddie Toh

THE Kuala Lumpur Stock Exchange (KLSE) snubbed Bintang Melewar's request for a reply by yesterday to its plan to circulate its offer document to Clob investors within the next nine days.

Officials of Bintang Melewar -- Negri Sembilan prince Tunku Abdullah and son Tunku Iskandar -- are believed to have asked the KLSE for a formal reply to its finalised proposal by 5pm yesterday.

But as at press time yesterday, the KLSE was silent on the matter. Bintang Melewar had on Thursday said that Singapore's Central Depository Pte Ltd (CDP) -- which holds a joint nominee account for the 172,000 Clob investors -- has tentatively agreed to dispatch its offer documents to the investors.

There was no statement yesterday from either the CDP or the Singapore Exchange.

The KLSE had said that only a proposal from Effective Capital, which is controlled by Singapore businessman Akbar Khan, met with its requirements. But Bintang Melewar officials proceeded with its offer as the KLSE had also said that it was not its job to consider the merits of private sector proposals to unlock the accounts holding almost RM19 billion (S$8.5 billion) worth of Malaysian shares previously quoted on Singapore's Clob International.

In leaving the Bintang Melewar proposal in limbo, the KLSE appeared to have taken the cue from Malaysian Finance Minister Daim Zainuddin, who is closely linked to Akbar Khan of Effective Capital, when it implicitly urged investors to accept the "Khan Solution".

"As stated by the finance minister, in the interest of time, it is best for Clob investors to focus on existing proposals. Existing proposals mean those proposals which have been confirmed to have complied with the KLSE and MCD (Malaysian Central Depository) rules and procedures and are ready to be implemented. To date, only Effective Capital's proposal has fully complied,'' the KLSE had said in a statement on Jan 28.

In the same statement, KLSE said that Bintang Melewar and two other contenders -- Continental Edge and Singapore's Collective Custodial -- had not submitted sufficient details to warrant a stamp of approval by Dec 31, 1999.

Bintang Melewar has disputed the KLSE statement, saying that its proposal was comprehensive and that it provided details "akin to preparation for an initial public offering".

Bintang Melewar is proposing to release the shares over 14 months -- 3 1/2 months to register the investors at MCD and another 10 1/2 months to release the shares in batches, starting from June this year. It said each transfer would not amount to more than 0.04 per cent of the total market capitalisation of the KLSE, which should satisfy Malaysian concern that any Clob solution should not disrupt the stockmarket.

For its efforts, Bintang Melewar will collect a fee of 1 per cent based on the value of the investors' portfolio on Dec 30, 1999. The closing date of the offer is March 3.

The KLSE has set a final deadline of June 30 to resolve the Clob impasse. "Why do you think the CDP account was extended (after it expired last December)? It's to allow for the completion of Effective Capital's plan," said a Malaysian official.

Effective's plan calls for the release of the shares over 22 months and a commission of 2 per cent.