CASH to submit new Barito deal plan

CASH to submit new Barito deal plan

KUALA LUMPUR (Reuter): Construction & Supplies House Bhd.
(CASH) said yesterday it will soon submit a new proposal to
Malaysia's Securities Commission for its takeover by Indonesia's
Barito Group chairman Prajogo Pangestu.

"We have a proposal done up and it has been submitted to all
parties for agreement," CASH's controlling shareholder Joseph
Ambrose Lee said in a telephone interview from his office in Kota
Kinabalu, in Sabah.

He said it would be soon sent to the Securities Commission for
approval. "I hope to do it within this month."

CASH said in June that the Securities Commission had rejected
the proposed takeover, a 2.5 billion ringgit (US$1 billion) deal
combining cash, shares and irredeemable convertible unsecured
loan stocks.

Under the "reverse takeover" proposal, Prajogo's timber assets
would be injected into the Malaysian company. In exchange, CASH
would get a 30 percent stake in PT Barito Pacific Timber, which
is controlled by Prajogo.

The deal would create a regional timber empire between two of
the world's biggest timber-producing countries.

Lee said the new proposal makes some changes in the pricing,
valuations and the structure of the deal and would take into
account that the new entity would be "a regional afforestation
company".

"Since the last deal was submitted, there have been changes in
terms of the price of timber," Lee said. "It is good time to
enter timber deals because the price of logs is at its lowest in
history."

He declined to give further details pending submission of the
proposal to the Securities Commission.

Reasons

The Securities Commission never said why it rejected the deal,
but analysts have given two possible reasons.

One was that a foreign party should not have a controlling
stake in a Kuala Lumpur listed company, although there is no rule
against it except in key sectors like banking and public
utilities.

The other was that the deal was too pricey, analysts said.

Lee's comments about how the lower price of timber would be
reflected in the new submission indicate that the pricing issue
was a key factor in the rejection.

"They valued Barito's assets very high," said one analyst.
"Timber prices have since fallen substantially."

CASH, a small building supplies firm that has posted losses,
was the second most actively traded stock yesterday, rising 28
cents at midday on volume of 7.5 million shares.

For the half-year ended June 30, CASH posted a loss of 2.58
million ringgit against a loss of 4.32 million in the
corresponding period of 1994.

The market has speculated that CASH will finance its stake in
the deal through a rights issue, with Lee retaining a minority
stake in the firm. The deal has enjoyed high-level support from
the government.

In the latest issue of Asiamoney, Finance Minister Anwar
Ibrahim expressed optimism that the takeover would be approved if
it followed Securities Commission guidelines.

Prajogo would have ended up with 64.15 percent of CASH's
enlarged paid-up capital of 831.42 million shares of 50 Malaysian
cents each under the old deal.

Analysts said he may have to accept a lower majority share and
possibly dilute his holdings below 50 percent in the future under
the new proposal.