S&P: takes action on three Malaysian GREs

Thu Jul 28, 2011 1:01am EDT

(The following was released by the rating agency)

-- On July, 27, 2011, Standard & Poor's Ratings Services lowered the local currency sovereign rating on Malaysia to 'A' from 'A+'.

-- We are, therefore, taking rating actions on three GREs: PETRONAS, Axiata, and Telekom Malaysia.

-- The sovereign rating action has no rating impact on any other corporate entity that we rate in Malaysia.

SINGAPORE (Standard & Poor's) July 28, 2011--Standard & Poor's Ratings Services said today that it took various rating actions on three Malaysian government-related entities (GREs) after the sovereign rating action on Malaysia (foreign currency A-/Stable/A-2; local currency A/Stable/A-1; axAA+/axA-1) (see "Malaysia 'A-' FC Rating Affirmed; Local Currency Rating Lowered To 'A' From 'A+' On Revised Methodology; Outlook Stable," published on July 27, 2011, on RatingsDirect on the Global Credit Portal) as follows:

To From

Downgraded

Petroliam Nasional Bhd. (PETRONAS)

Local currency rating A/Stable/-- A+/Stable/--

ASEAN scale rating axAA+/-- axAAA/--

Axiata Group Bhd.

Foreign currency rating BBB/Stable/-- BBB+/Stable/--

Local currency rating BBB/Stable/-- BBB+/Stable/--

ASEAN scale rating axA/-- axA+/--

Senior unsecured notes BBB- BBB

CreditWatch Action

To From

Telekom Malaysia Bhd. (TM)

Foreign currency rating A-/Watch Neg/-- A-/Stable/--

Local currency rating A-/Watch Neg/-- A-/Stable/--

ASEAN scale rating axAA/Watch Neg axAA/--

Senior unsecured notes A-/Watch Neg A-

Affirmed

Petroliam Nasional Bhd.

Foreign currency rating A-/Stable/--

Senior unsecured notes A-

We lowered the local currency rating on PETRONAS to reflect the company's critical role and integral link with the Malaysian government and its sensitivity to government intervention. We equalized the long-term corporate credit rating on PETRONAS with the sovereign credit rating on Malaysia. We assessed PETRONAS' stand-alone credit profile to be 'aa-'.

We downgraded Axiata to reflect the sovereign local currency rating action because our ratings on the company factor in our view of extraordinary government support. According to our GRE methodology, we have now equalized the ratings on Axiata with our assessment of its stand-alone credit profile of 'bbb'. We continue to believe there is a "moderate" likelihood that the Malaysian government, through its investment holding arm Khazanah Nasional Bhd., would provide timely and sufficient extraordinary support to Axiata in the event of financial distress. This is based on our view that Axiata has a "strong" link with the government, although it has a "limited" role in Malaysia's economy compared with that of other Malaysian GREs.

We consider TM to have a "strong" link with, and an "important" role to, the government. We, therefore, believe there is a "moderately high" likelihood of extraordinary government support to TM, whose stand-alone credit profile we assess to be 'bbb+'. We will resolve the CreditWatch placement on TM, in which Khazanah owns 28.7%, based on our assessment of the company's stand-alone profile and the sustainability of the recent improvement in its financial metrics. A CreditWatch with negative implications indicates that we could lower or affirm the ratings in the next 90 days. Given TM's strong business risk profile, we will consider the company's financial policies in light of its investment and funding plans for the next couple of years.

The sovereign rating action does not affect the ratings on any other corporate entities that Standard & Poor's rates in Malaysia, either privately owned or GREs. These entities include Tenaga Nasional Bhd. (BBB+/Stable/--; axA+/axA-1) and AmanahRaya Real Estate Investment Trust (BBB-/Negative/--; axBBB+/--).

RELATED CRITERIA AND RESEARCH

-- Rating Government-Related Entities: Methodology And Assumptions, Dec. 9, 2010

http://www.reuters.com/article/2011/07/28/markets-ratings-malaysiangre-idUSWNA497420110728

Khazanah targets 20pc return on new investments

Khazanah targets 20pc return on new investments
By Hamisah Hamid
Published: 2010/09/28

STATE investment arm Khazanah Nasional Bhd expects its newer investments, including the London-based carbon emission consultancy Camco International Ltd, to generate over 20 per cent in annual returns.

“We are hitting about 13 per cent, but I think for our newer investments, we are hitting over 20 per cent in terms of annual returns,” Khazanah managing director Tan Sri Azman Mokhtar told reporters on the sidelines of the World Capital Markets Symposium 2010 in Kuala Lumpur yesterday.

Khazanah bought 9.28 million Camco shares at 20 pence each, which gives it a 5.3 per cent stake. It will also partner to invest in the emissions-to-energy market in Southeast Asia.


Azman said Khazanah has paid a fair price.


“The amount is relatively small relative to our portfolio but it is an important investment in terms of understanding the technology and methodology in this area … and on top of that, we think that it’s financially viable,” he said.

Khazanah feels it needs to be in the area because under the New Economic Model, sustainable development covers carbon emission reduction.

He also said that currently, Khazanah’s gross portfolio is about US$35 billion (RM108 billion).

“If you were to take foreign holding of our key companies,
for example CIMB or Axiata, the foreign component is about 20 per cent.

“I think 80:20 (local:foreign) is about right at this stage of our development as we need region

Read more: Khazanah targets 20pc return on new investments http://www.btimes.com.my/Current_News/BTIMES/articles/20100928004513/Article/#ixzz10pN44kYw

Parkway: Prize for Indian billionaire or Malaysian fund

Parkway: Prize for Indian billionaire or Malaysian fund
17 Jun 2010, 0048 hrs IST,REUTERS

NEW DELHI/SINGAPORE: India's Fortis Healthcare is locked in a battle with Malaysian sovereign wealth fund Khazanah for control of Singapore-based Parkway Holdings, Asia's biggest listed hospitals firm.

Fortis, which owns roughly 25 per cent of Parkway, was keen to build a controlling stake in the company before Khazanah made a surprise $835 million offer last month to lift its stake from 23.5 per cent to 51.5 per cent. Parkway operates 16 hospitals across Asia including Singapore, Malaysia, India and China. Its prized assets are Singapore hospitals, Gleneagles and Mount Elizabeth, whose patients include many wealthy businessmen and politicians.

By July 30, Fortis needs to say whether or not it intends to make a full offer for Parkway. Several analysts expect Fortis, controlled by billionaire brothers Malvinder and Shivinder Singh, to launch a counter bid for Parkway at a 10-15 per cent premium over Khazanah's S$3.78 a share offer.

A source linked to Fortis said the firm's preference is to make a partial offer to buy just over 50 per cent of Parkway instead of making a general offer, which would require a waiver from authorities. But bankers say this is unlikely as Singapore has never given a waiver to firms such as Fortis, which bought into Parkway less than six months ago. If it fails to get an exemption, Fortis will have to spend at least $2.5 billion to buy Parkway shares it does not already own.

Fortis plans to raise as much as $1.2 billion, preparing itself for a possible counterbid. It bought into Parkway to use it as a springboard for overseas expansion. Malvinder, Fortis' chairman, moved to Singapore with his family and took over as Parkway's chairman.

"It would be a choice between the long-term vision of Singh brothers and managing short-term financial opportunities," said Muralidharan Nair, partner for health sciences at Ernst & Young in Mumbai.

With a combined fortune estimated at $3 billion by Forbes magazine -- good for 17th place on its India rich list -- the Singh brothers have the means and access to capital to take on the Malaysian fund. A successful counterbid by Fortis may also put a question mark on Parkway's expansion into Malaysia, as most of the Singapore firm's operations in the country are carried out via Pantai, in which it holds a 40 per cent stake and the balance is held by Khazanah.

Pantai accounts for a quarter of Parkway's revenue and almost one-third of earnings before interest, tax, depreciation, amortisation and rent, according to Credit Suisse.

Making a counterbid for Parkway was originally the second choice for Fortis, said sources aware of the Indian company's game plan. The recent posturing by Fortis has kept Parkway's shares at or above Khazanah's offer price and the Malaysian firm may not be able to get enough acceptance as a result.

Should Khazanah fail, Fortis will retain control of Parkway with four seats on the board versus Khazanah's two. Khazanah cannot accept any of the shares offered if the acceptance falls short of 51.5 per cent under Singapore rules relating to partial offers, a spokeswoman for Khazanah said. But if the Malaysian wealth fund succeeds in its offer, Fortis will be stuck with a minority stake in a company it cannot control although it might be in a position to block proposals made by a Khazanah-led management.

Khazanah and Fortis may also try to reach some form of compromise whereby both parties have a say in the strategic outlook for Parkway. Fortis has been lobbying the governments of Singapore and Malaysia to reach some kind of a deal, sources said.

Fortis may decide to sell out, but only if Khazanah raises its offer price. Based on Khazanah's offer price, Fortis will make a gross profit of about 6.1 per cent on its original investment of $685 million, which valued Parkway at about S$3.56 a share. After deducting around 2 per cent for fees and commissions payable to bankers, lawyers and others associated with the deal, the Indian company is set to pocket a relatively small profit of around $30 million.

"The Singh brothers will put rationality before adrenalin push. They won't fight for ego. Expect them to exit Parkway if they get a good premium," said Jagannadham Thunuguntla, equity head at SMC Capitals in New Delhi.

http://economictimes.indiatimes.com/Parkway-Prize-for-Indian-billionaire-or-Malaysian-fund/articleshow/6058128.cms

Pinewood Shepperton gets Malaysia film studio deal

Pinewood Shepperton gets Malaysia film studio deal

Wed Dec 16, 2009 1:13pm IST

* To get consultancy and brand licence fees

* 2010 fees to be offset by infrastructure set-up

* 2009 trading remains in line with mkt view


Dec 16 (Reuters) - Film studios Pinewood Shepperton Plc (PWS.L: Quote, Profile, Research) said it had entered into an agreement for the development of a new studio facility in southern Malaysia and that its trading for 2009 remained in line with market expectations.

The British firm said it would get consultancy and brand licence fees for sales and marketing services as part of its agreement with Khazanah Nasional Berhad, the investment holding arm of the Government of Malaysia.

The company, whose facilities in south east England were used for the production of Oscar winner Slumdog Millionaire and the Harry Potter films, said the fees due in 2010 would be largely offset by setting up the sales and marketing infrastructure.

Pinewood Shepperton had recently concluded a long-term sales and marketing agreement with Pinewood Toronto Studios. "Following our deal for Pinewood Toronto and now Pinewood Malaysia, we are exploring further opportunities in this new and growing market," the company said in a statement. The company's shares closed at 131.50 pence on Tuesday on the London Stock Exchange. (Reporting by Purwa Naveen Raman in Bangalore; Editing by Deepak Kannan)