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.