8 Feb 2001

No independent valuation in MAS deal: Tajudin

By Eddie Toh

MALAYSIAN businessman Tajudin Ramli has disclosed that no independent valuation was done when the government agreed to pay a hefty premium for his substantial block of shares in Malaysian Airline System (MAS) last month.

"No independent valuation was carried out for the said sale consideration," Mr Tajudin told minority shareholders of Naluri Bhd, in which he owns 47 per cent, in a circular dated Jan 22. Naluri owned 29.09 per cent of the national carrier.

However, minority shareholders of Naluri are not likely to complain although it will incur a loss of RM4.8 million (S$2.2 million) from the disposal of the MAS stake for RM1.79 billion in cash.

The proceeds will come in handy for debt-laden Naluri. Mr Tajudin said RM927.4 million will be used to retire Naluri's debts, while the balance of RM864.5 million will be for new business ventures.

In the meantime, Naluri will place the remaining proceeds in banks and earn RM24.2 million a year -- more than the loss of RM4.8 million from the disposal.

However, the deal created a public furore when the Finance Ministry, headed by Daim Zainuddin, decided to pay RM8 per share for the MAS stake.

The price was below Mr Tajudin's cost of RM8.70 in 1995 but more than double the market price of RM3.62 when the deal was inked. And the purchase price was almost twice the net

tangible assets of the money-losing carrier.

Critics of the government and even politicians in the dominant political party, United Malays National Organisation (Umno), have argued that the government could have secured a lower price tag for the shares although they form a strategic stake in the company.

The Finance Ministry and parties acting in concert now control almost 50 per cent of MAS. They have secured a waiver from making a mandatory general offer for the rest of MAS at RM8 per share after having breached the trigger point of 33 per cent.

The government is expected to sell part of its MAS holdings to a foreign party to help turn the airline around.

However, discussions with foreign carriers have been protracted. Qantas and SwissAir have yet to reach any preliminary pact with the Malaysian government after months of negotiations.

Even the search for a new chairman to replace Mr Tajudin has not been easy.

Earlier this week, Niki Lauda, a former racing driver and founder of Lauda Air, rejected an offer to head MAS and will be heading Jaguar's Formula One team instead