Singapore Corporate News - 5 Jan 2008

OCBC to buy M'sian financial services firm

OVERSEA-Chinese Banking Corporation (OCBC), which already owns 28.15 per cent of PacificMas Bhd (Pacmas), has unveiled plans to buy the rest of the Malaysian financial products and services group for about RM528 million (S$230.5 million).

OCBC said it wants to develop greater synergies in financial services businesses in Malaysia with Pacmas. OCBC Bank (Malaysia) already distributes some of Pacmas's unit trusts and general insurance products through its bank branches.

In an announcement yesterday, Singapore's smallest bank by market capitalisation, said it would, through its subsidiary OSPL Holdings Sdn Bhd (OHSB), make a conditional cash offer for shares it does not already own in Pacmas. The group's 28.15 per cent stake in Bursa Malaysia-listed Pacmas is owned by OCBC Bank and its subsidiaries.

OCBC intends to offer RM4.30 per Pacmas share, valuing the company at about RM735 million. The offer price represents a 15 per cent premium to yesterday's closing price of RM3.74 for Pacmas shares.

Pacmas is a Malaysian investment holding company with key subsidiaries involved mainly in financial products and services. These include unit trust funds, asset management, underwriting of general insurance business, leasing and hire purchase, and property investment and management.

The offer is conditional on OHSB owning more than 50 per cent of Pacmas and regulatory approval from Malaysia's Ministry of Finance and Securities Commission.

For the financial year ended Dec 31, Pacmas had total revenue of RM230 million and net profit of RM37.6 million. As at Sept 30, its net assets attributable to shareholders were about RM712 million.

Cosco Singapore to expand capacity in region

Cosco Corp Singapore Ltd, the shipbuilding and repair unit of China's biggest shipping line, said that it is seeking to expand capacity in China and South-east Asia as demand rises for moving raw material, fuel and consumer goods.


'We don't have enough space,' Cosco Singapore's president Ji Hai Sheng said in an interview yesterday. 'So, we are planning to expand in existing shipyards and probably start new shipyards.'

Shipping lines, including STX Pan Ocean Co and Pacific Basin Shipping Ltd, have ordered more vessels this year to transport raw material to China, the world's biggest buyer of iron ore used to make steel. About 90 per cent of global trade is carried by sea.

Cosco Lianyungang Shipyard Co, a venture with Jiang Lianyungang Port Co in China, has three berths and will soon add a floating dock for ship repairs and conversions, Mr Ji said. The venture will add revenue, he said, without elaborating.

In October, Mr Ji forecast a record annual profit for 2007. Cosco Singapore, which had a record net income of $205.35 million in 2006, posted a 37 per cent increase in profit to $220.08 million in the first nine months of last year.

UOB plans holding firm for Jakarta banks

UNITED Overseas Bank (UOB), Singapore's second-largest bank by assets, plans to create a holding company for its two Indonesian lenders by 2010 to meet ownership rules.

UOB expects Indonesian tax policies that would help make the plan feasible to be in effect before the creation of the holding company, PT Bank UOB Buana, one of the units, said in a statement to the Jakarta Stock Exchange late yesterday.

The holding company will help UOB meet a regulation restricting control of more than one financial services company in South-east Asia's biggest economy.

UOB owns 61 per cent of Bank UOB Buana and also has its own Indonesian branch called PT Bank UOB Indonesia.

UOB and other investors including Singapore's Temasek Holdings and Malaysia's Khazanah Nasional must sell their holdings in Indonesian banks, merge them or put them under a holding company, according to central bank regulations.

Meanwhile, the securities unit of Ping An Insurance (Group) Co, China's No. 2 insurer, is planning a fund management venture with UOB Asset Management, the China Daily reported yesterday.

Old Chang Kee launches IPO for listing on Catalist

THE Singapore Exchange's revamped junior board Catalist could soon get a whiff of curry puff, with an impending listing by Old Chang Kee.

The food and beverage group, known for its hot-selling curry puffs and Chinese fried snacks, has registered its prospectus with the Monetary Authority of Singapore with the aim of raising gross proceeds of $5 million for its expansion plans. Its 25 million new shares are priced at 20 cents each.

Based on FY2006 net earnings of $3 million and net earnings per share of 4.44 cents, the offer price is at a historical price-earnings ratio of about 4.5 times.

'Our listing on the Singapore Exchange marks the beginning of a new phase and serves as a launch pad for us to take Old Chang Kee to even greater heights,' said Old Chang Kee chief executive officer William Lim Tao-E. 'We are very excited about our prospects and our IPO puts us in a strong position to embark on our expansion plans and execute our growth strategies in Singapore and beyond.'

A household name for decades, Old Chang Kee runs 54 retail outlets in Singapore, two in Kuala Lumpur and three in Chengdu, China. It has four franchise outlets in Jakarta and two others in Manila.

Old Chang Kee has budgeted $1 million from the IPO proceeds for its overseas expansion in China's Chongqing and sites in Australia. The group is also setting aside $1 million to increase and refurbish its retail outlets in Singapore, where it plans to have at least five more new outlets within two years.

Another $500,000 will be used for expansion through strategic alliances, acquisitions, joint ventures and franchises. The remainder will be used for listing-related expenses and working capital.

The company is banking on the rising demand of convenience food products in Singapore to drive its growth.

'With the arrival of the integrated resorts and Formula One over the next few years, Singapore is an exciting place to be in,' Mr Lim said. 'We are confident and excited about the prospects of the local food and beverage industry, and plan to intensify our search for strategic locations in Singapore to set up new outlets.'

The public offer of one million new shares will open today and close at noon on Jan 14.

As the listing application was made under the Sesdaq rules, the firm will be given a timeframe to comply with the new Catalist rules.

Indonesia's telco sector still competitive: SingTel

SINGTEL Mobile, which is battling an anti-trust case in Indonesia, yesterday demonstrated how the telco sector there is truly competitive, even though the Singapore operator has a stake in the Telkomsel mobile phone operator.

SingTel backed up the point by figures showing that Indonesian mobile penetration rates have risen since it made the investment in Telkomsel in 2001.

At a briefing, SingTel International CEO Lim Chuan Poh told reporters that wireless penetration in Indonesia is now almost 40 per cent, while 'the number of wireless and mobile operators licensed to provide nationwide services also increased from six to 10 just in the past three years alone'.

'Clearly, the Indonesian mobile market is alive and vibrant,' he added.

SingTel and subsidiary SingTel Mobile last month filed appeals with the District Court of Central Jakarta against their conviction for breaching Indonesian competition law by the Commission for Supervision of Business Competition (KPPU). The other convicted parties include Temasek Holdings and Singapore Technologies Telemedia.

Yesterday, SingTel presented evidence from a study by Nera Economic Consulting that indicates that Indonesia's telco sector is still competitive as a result of low entry barriers.

According to Nera, the sector's market concentration is still low, while prices have clearly fallen in the past few years.

For example, 'Telkomsel's ARPM (average revenue per minute) fell by 32 per cent between 2003 and 2006', said Nera's senior vice-president William Taylor at the briefing.

In fact, he added, 'the drop was even faster after SingTel Mobile became a shareholder of Telkomsel'.

Also, Indonesia ranked lowest in terms of three-minute peak call price, against 16 other comparable markets, including Sri Lanka, Vietnam and Egypt. For instance, the charges stood at 11 US cents in Indonesia - lower than Sri Lanka's 33 US cents and Vietnam's 15 US cents.

Yesterday, SingTel emphasised its stance that the KPPU ruling was groundless, adding that the regulator did not have jurisdiction over the firms as they were neither incorporated nor domiciled in Indonesia.

Also, 'there is no clear evidence that the companies have breached Article 27(a). SingTel does not own shares in any telco company in Indonesia, and SingTel Mobile only owns 35 per cent of Telkomsel', said SingTel's lawyer Wimbanu Widyatmoko.

Article 27 (a) of a 1999 Competition Law states that a business group may not own majority shares in two or more companies operating in a single sector that would allow it to dominate more than 50 per cent of market share.

SingTel expects a final judgment on its appeal by the end of February or early March.

Jurong Shipyard clinches US$280.5m contract

JURONG Shipyard, a wholly owned subsidiary of mainboard-listed SembCorp Marine (SembMarine), has landed the first major offshore marine deal of the new year.

SembMarine, the world's second largest maker of offshore marine drilling rigs, announced yesterday that Jurong Shipyard had been awarded a US$280.5 million contract by Atwood Oceanics Pacific to build a semi-submersible drilling rig.

Atwood, whose parent is based in Houston, Texas, has six months to decide if it wants to exercise the option for a second unit which could swell SembMarine's current order book of $8.6 billion to well over $9 billion.

The new contract is a testimony of the confidence that Jurong Shipyard's customers have in the rig builder despite its current problems relating to the possibility of US$303 million in losses resulting from what it claims are unauthorised foreign exchange transactions by its former finance head, Wee Sing Guan.

Mr Wee has since been sacked and the matter referred to the Commercial Affairs Department, the white collar crime unit of the Singapore Police Force.

On completion in early 2011, the new Friede & Goldman Ex-D Millennium design rig will be able to conventionally moor in up to 6,000 feet of water with its own mooring equipment. With pre-laid mooring equipment, the rig could work in up to 8,000 feet of water. The semi-submersible, which is being engineered for stability and versatility, is also suitable for operations in most of the world's challenging deepwater arenas.

The SembMarine contract does not include the cost of owner furnished equipment and other related costs. If these were included, the total cost of the rig will be between US$570 million and US$590 million.

Said John Irwin, president and chief executive officer of Atwood Oceanics Inc: 'We are pleased to be working with Jurong Shipyard based on their past track record and experience . . . The rig will become the 10th mobile offshore drilling unit owned by the Atwood Oceanics group of companies and has concurrently been awarded a multi-year contract with a major client.'

The rig will be contracted out to Chevron Australia for three years, with an option to extend the term for another three years. Chevron will pay about US$470,000 a day if the contract term is three years and about US$450,000 a day if its for six years. Both day rates are subject to adjustment for cost escalations.

Don Lee, Jurong Shipyard's senior general manager of its offshore division said: 'We are pleased with the confidence that Atwood Oceanics has placed with us in ordering the first new semi-submersible rig unit with Jurong Shipyard.'

CSC to buy 70% of Wisescan Engg for $2.7m

CONSTRUCTION group CSC Holdings, which specialises in foundation and geotechnical engineering, has signed a sale and purchase agreement for a 70 per cent stake in Wisescan Engineering Services for $2.65 million.

The purchase will be made through CSC's wholly owned subsidiary, Soil Investigation.

The sellers are Wisescan's managing director Chua Keng Guan and Chua Limin. Mr Chua Keng Guan will retain a 30 per cent stake and his position as managing director.

The sellers are guaranteeing a pre-tax profit of at least $800,000 a year for three years from April 1 this year. They will pay 70 per cent of the shortfall if the target is not met.

Wisescan is a surveyor specialising in solutions relating to tunnelling and automatic monitoring survey. It also has a presence in several overseas markets including Taiwan, China, India and Malaysia.

With the proposed acquisition, CSC is gearing up to handle more infrastructure and transport projects in Singapore such as the extension of mass rapid transit lines and the underground utility cable tunnel.

'With the Singapore government's recent announcements to develop and build new mass rapid transport and other infrastructure plans ... the proposed acquisition will enhance the group's synergistic competitiveness while broadening the group's presence in overseas markets,' it said in a statement.

The acquisition, which is subject to satisfactory due diligence on Wisescan, is expected to be completed within four months. It is not expected to have any material effect on the group's net tangible assets and earnings per share for the current financial year.

Last November, CSC reported net profit for the six months to Sept 30 of $19.1 million, up from $4.8 million for the previous corresponding period, as revenue surged 245 per cent to $185 million.

CSC closed yesterday at 33.5 cents, down 1.5 per cent.

Offer a way out for Vantage minorities

FOR minority shareholders of Vantage Corp who have to bear with the long share trading suspension, Galleria Resources' general offer must have come as a relief.

Vantage shares have been suspended for more than three years since September 2004 after it sold its core publising business.

The minority shareholders can now sell their shares in the shell company after Rafat Rizvi, a British citizen of Pakistani descent, unveiled a mandatory cash offer for the remaining shares at 24 cents each.

On Thursday, Mr Rizvi's investment vehicle, Galleria Resources, agreed to buy 77.5 per cent of Vantage from its controlling shareholder, Kea Kah Kim, at 24 cents per share, triggering the offer. Last month, Singapore Exchange decided to delist Vantage after it rejected its proposed acquisition of Healthway Medical Services as the enlarged group would fail to satisfy listing rule requirements.

Annaik wins wastewater deals

ANNAIK has secured three contracts to build, operate and own wastewater treatment plants in three towns of Zhejiang province's Huzhou city, China. The company, through subsidiary Anxon Eco Holdings, will own 60 per cent interest in these three plants while the remaining 40 per cent will be held by its Chinese partners. The transactions are not expected to have any material impact on the earnings of the company for the current financial year.

Labroy trading suspension

AT the close of the offer for shipbuilder Labroy Marine's shares yesterday, Dubai Drydocks World said that it had received valid acceptances amounting to a stake of 98.39 per cent in Labroy, paving the way for it to be delisted. Labroy has asked for share trading suspension from Monday.