GEORGETOWN: The federal government should direct Tenaga Nasional Bhd to reduce the electricity tariff which is taking a toll on industries which are already reeling from the global economic meltdown.

Penang chief minister Lim Guan Eng said although oil prices had dropped to almost US$45 (RM160.65) per barrel and coal prices had also tumbled from US$180 to US$84 per tonne, Tenaga had yet to reduce the electricity tariff which went up by 26% earlier this year.

Tenaga’s rationale for not reducing the tariff is that it is still dependent on coal, which accounted for 40% of its energy generating usage (the other 60% being fuel).

“If we wish to attract more investors, we will have to bring their costs down and reducing electricity tariff would help these industries, especially now,” Lim said.

He said the federal government should also look into reducing the price of petrol further.

“In 2005, when crude oil was at US$47 per barrel, the petrol price was at RM1.42 per litre and this is where the price should be today.

“Instead of reducing by 10 sen, which would not make much of a difference, the government should reduce by 48 sen.

“There will be no impact on consumers if the government does not bring down the price of petrol to reasonable rates, befitting the current oil prices,” he added.

On the criticism levelled by Mark Ooi, former political secretary to former chief minister Tan Sri Dr Koh Tsu Koon, that the present state government was claiming credit for the RM8 billion in investments drawn to date, Lim said: “I do not have to stoop to Gerakan’s level. The figures speak for themselves. Compared to the RM4.7 billion in foreign investments attracted last year, we have been successful in getting more investments.”

“They may have had these investors in the pipeline, but we clinched the deals, the investors could have backed out, even if it was initiated by the previous state government.

“These investment figures are not our own but issued by MIDA, so if Gerakan is not happy, they should go sort it out with them, not pick a fight with us,” Lim added.

LONDON: Oil fell below US$43 (RM156.09) a barrel on Dec 9, reversing earlier gains as investors expected US data to show another drop in fuel demand in the world’s top consumer.

US crude was down 54 cents at US$43.17 a barrel at 1418 GMT, after sinking earlier to US$42.89.

London Brent crude eased by 59 cents to US$42.83.

The downward trend for oil remained very much intact.

“US$40 a barrel could be difficult to break, but we expect WTI to go lower in the coming months. GDP, oil demand weakness and the crude overhang are much clearer than Opec cuts so far,” said SG Commodities Research said in a weekly note.

Oil traders were awaiting the 1700 GMT release on Tuesday of the US Energy Department’s Short Term Energy Outlook, which was expected to show downgrades in 2009 oil demand estimates.

In a forecast issued last month, the Energy Department said total US oil demand was projected to fall by an additional 250,000 bpd, or 1.3% next year, after dropping 1.1 million bpd, or 5.4%, in 2008.

The outlook for global oil consumption is very much on the minds of ministers from the Organisation of the Petroleum Exporting Countries (Opec), which meets on Dec 17 in Algeria.

Opec is expected to reduce overall production by a minimum of one million barrels per day (bpd).

“Oil is on a count-down to Opec now and everyone is expecting them to come up with something big — probably a cut of 1-1.5 million bpd,” said Rob Laughlin, senior oil analyst at brokers MF Global in London.

“If Opec doesn’t make a big cut, this market is in trouble.” — Reuters

KUALA LUMPUR: AirAsia Bhd has confirmed that its major shareholder Tune Air Sdn Bhd has been unable to secure financing to fund the privatisation of the low-cost carrier.

AirAsia said on Dec 5 that it had been informed by Tune Air that the latter was “unable to secure financing on acceptable terms and conditions from financial institutions to fund the potential privatisation.”

“Hence, Tune Air is unable to form a firm intention to proceed with the potential privatisation exercise of AirAsia,” it said in a statement released via Bursa Malaysia’s website.

This confirms The Edge Financial Daily report that AirAsia’s proposed privatisation was not taking off as Tune Air had been hampered by limited financing options due to the global credit crunch.

Sources had told the publication that the global economic slowdown, which have seen most of the developed world slipping into recession, had made it difficult for Tune Air to raise money for the purpose.

It was also reported that certain investors who were initially keen to take part in the privatisation of the budget carrier had also turned bearish, deciding now not to proceed with it. The stock fell another five sen to 91.5 sen on Dec 5.

KUALA LUMPUR: Hong Leong Bank (HLB), the exclusive appointed agent of Amanah Raya Bhd, has launched the Hong Leong Invest Safe II.

Hong Leong Safe II is a trust deposit for customers who make a placement that can potentially enjoy steady growth and enhance yield on their investments, the bank said in a statement ysterday.

“The first product launched with Amanah Raya in 2006 generated positive response from the public. We exceeded RM500 million in sales and our customers have been happy with the returns.

“On a gross basis, customers have been enjoying a steady return of 5% per annum. We’re confident the new product will equally excite our customers as we are targeting to deliver similar returns,” said Moey Tan, chief operating officer for personal financial services.

She said many customers favoured Invest Safe as it offers competitive dividends, compounding interest and the capital is protected.

The Hong Leong Invest Safe II is limited to RM300 million and is only available through HLB. — Bernama

The company reported a third quarter loss of RM40.38 million and warned that its UK gaming operations would be hit.

The company said that its power division would be hit by lower demand and lower prices.

Citibank today cuts Genting’s target price to RM3.79 from RM3.88 ringgit and cut fiscal 2008 earnings by 6.5 per cent. - Reuters
JPMorgan Chase & Co today downgraded the stock to “underweight” from “overweight” and slashed its 12-month price target to RM3.70 from RM6.40.

“With significant earnings headwinds expected ahead as a result of the current economic slowdown coupled with the existing overhang at Resorts World at Sentosa in Singapore, we think it would be difficult for Genting shares to outperform the market over the next six to nine months,” JPMorgan analyst Sit Yin Wong said in a research note.

Genting shares have fallen almost 45 per cent this year, more than the 41 pe rcent decline in the Kuala Lumpur Composite Index. - Agencies

KUALA LUMPUR: Non-Muslims in Selangor have been assured for now that alcoholic beverages will continue to be sold at retail and supermarket outlets.

Selangor executive councillor Teresa Kok, when met at parliament yesterday, said there were no plans to stop the sale of alcoholic beverages in the state.

She admitted though there was a suggestion to curb the sale of beer and related products to Muslims and those below 18 from another exco, Datuk Dr Hasan Ali, the chances of the proposal going through remain slim.

Explaining the proposal, the Seputeh MP said it has been observed that teenagers aged below 18 years can easily obtain beer and other alcoholic beverages from 24-hour retail outlets as they are placed next to soft drinks.

She added that the matter was first raised by Hasan before it was discussed at a Klang Municipal Council meeting.

“But it was not accepted. I’m not sure why this was brought up in the Klang Municipal Council meeting, but I don’t think it will be approved,” said Kok.

“What we intend to do is to discuss with 7-Eleven and supermarket outlets on the practicality of halting the sale of alcohol to minors and Muslims.”

She also dismissed talk that coffee shops are included in the proposal. PKR adviser Datuk Seri Anwar Ibrahim agreed with Kok’s views on this.

“While it’s true that we don’t want to encourage youths and Muslims from consuming alcohol via easy access, there have been no suggestions from the state government to ban the sale of alcohol in open premises.

“Anyway, it’s only a suggestion made by the Klang Municipal Council. We are not here to deny the rights of non-Muslims. If it is sold in public premises, then we don’t want to be seen encouraging young Malaysians or Muslims from consuming alcohol,” he said.

The present policy, said the opposition leader, is adequate and only needs some adjustments.

PAS deputy president Nasharuddin Mat Isa’s take on the matter, however, was sketchy.

Asked to comment on the matter, Nasharuddin Mat Isa said: “Our stand on this issue, as others which affect the morals and the safety of people, is that there should be control.

“We will try to do this in all the states where we are part of the government,” said the Bachok MP.

In Kelantan, said Nasharuddin, there are no new premises which are allowed to sell alcohol openly but PAS does not prohibit non-Muslims from consuming alcohol.

“Nevertheless, we’ll wait for more details from Selangor before deciding to bring this up in other states.”

Chinese dailies highlighted the issue that PAS Selangor intends to impose a ban on the sale of alcohol throughout the state, which will involve stopping the sale of these products in 7-Eleven outlets, mini-markets as well as ‘open’ coffee shops.

LOS ANGELES: “Live Free or Die Hard” movie star Bruce Willis has resolved his dispute with a Malaysian prince and his company over a US$2 million investment in “green rubber,” the actor’s attorney said yesteday.

Willis’ attorney Martin Singer said in a statement yesterday that the lawsuit was amicably resolved and that it resulted from a series of miscommunications.

On November 20, Willis sued Prince Imran Ibni Tuanku Ja’afar and Datuk Vinod B. Sekhar, principals of environmental technology company The Petra Group, in which he had invested.

The lawsuit said that Willis had been told by Sekhar that the actor stood to profit from an initial public offering of Petra subsidiary Elastomer Technologies, which had been set for the third quarter of 2008. The IPO did not happen and Willis tried to take his money out of the company.
Ja’afar, Sekhar and The Petra Group repaid Willis US$1.1 million of his original investment, but Willis said when he filed his lawsuit that the remaining US$900,000 was not returned, despite false assurances to the contrary given to him.

“Having resolved the matter, I will continue to maintain a shareholding position in the company and I wish the company, the directors and my fellow shareholders the very best for the future,” Willis said in a statement.

“I continue to believe in the green rubber technology and the vast potential it holds for the environment,” Willis said. - Reuters

Nov. 14 (Bloomberg) — Dexia SA, the world’s largest lender to local governments, will sell its bond insurance business for $722 million to Assured Guaranty Ltd., the bond insurer backed by billionaire Wilbur Ross.

Dexia will receive $361 million in cash and 44.6 million new Assured Guaranty shares for Financial Security Assurance Inc.’s insured portfolio of $425 billion, of which $110 billion was asset-backed securities, the Franco-Belgian lender said today. After the transaction, Dexia will own 24.7 percent of Assured Guaranty, which secured “back-up” financing from funds affiliated to WL Ross & Co.

“It’s unbelievable that they can sell the insurance portfolio for money,” said Jaap Meijer, a London-based analyst at Dresdner Kleinwort who recommends investors sell Dexia. “Still, they remain exposed to the financial products” of FSA, he added.

While Chief Executive Officer Pierre Mariani has cut risks associated with New York-based FSA, the lender must cover losses of as much as $4.5 billion at the financial-products unit. Dexia, which in September obtained a 6.4 billion-euro ($8.1 billion) lifeline from France, Belgium and Luxembourg to avert collapse, is among the worst hit European banks following the failure of Lehman Brothers Holdings Inc.

Dexia fell 13 percent to 4.35 euros by 1:35 p.m. in Brussels, valuing the bank at 7.67 billion euros. The stock has dropped 75 percent this year, more than the 60 percent decline of the 69- member Bloomberg Europe Banks and Financial Services Index.

Managing Risks

“We’ve decided to sell the bond insurance activity, which was FSA’s biggest activity,” Mariani, who replaced Axel Miller last month, told journalists in Paris. “It’s a way for Dexia to get rid of its strong exposure to U.S. real estate.”

Dexia expects to book a 1.5 billion-euro loss from the sale of the business, Mariani said.

The deal is subject to confirmation from rating agencies that the acquisition won’t have a “negative impact” on the company’s financial strength ratings, Assured Guaranty said in a separate statement. The cash portion of the deal will be funded from a share sale with “back-up commitment” from funds affiliated to WL Ross & Co., it added.

“The combination of the two organizations will create the premier financial guaranty company with the talent, capacity, financial resources and relationships to serve the demands of our customers,” said Assured Guaranty CEO Dominic Frederico.

Assured Guaranty agreed on Sept. 18 to let Ross raise his stake in the Hamilton, Bermuda-based bond insurer to 18.9 percent. Ross committed to invest as much as $1 billion in Assured Guaranty in February, taking a seat on its board.

FSA Provisions

FSA’s $16.5 billion financial products portfolio, which includes subprime mortgage-backed securities, is excluded from the Assured Guaranty deal. Dexia will cover a first loss of $3.1 billion from that unit on top of the $1.4 billion provisioned by Sept. 30. The French and Belgian states will guarantee the unit’s assets, Dexia said.

Dexia ran into trouble when it agreed in August to provide $300 million to FSA after provisions tied to the subprime crisis led to a loss at the unit. The bank had already pledged a $5 billion credit line to FSA in June, after injecting $500 million into the unit in February.

The lender said the financial crisis cost 2.19 billion euros in the third quarter, including an additional 460 million euros of FSA provisions after U.S. markets deteriorated. Bond investment losses totaled 741 million euros with 482 million euros of that attributed to Lehman.

Dexia posted a third-quarter net loss of 1.54 billion euros, after net income of 439 million euros a year earlier, the Paris- and Brussels-based bank said in an e-mailed statement today. That missed the median estimate of a 656 million-euro loss from seven analysts surveyed by Bloomberg News.

About BinaFikir Sdn Bhd
BinaFikir, founded in January 2002, is Malaysia’s premier independent financial advisory firm specialising in restructuring & reorganisations, M&A, debt/equity financing, Islamic structured finance and strategic financial advisory.

We adopt a holistic and strategic approach to corporate finance, rather than treating it merely as a singular ‘deal driven’ exercise. We ensure that the clients’ long term strategic outlook be the determining factor for any corporate finance activity, and such activity is evaluated in a balanced manner to maximize long term shareholder value.

We have an imbued and ingrained culture of excellence and strive to deliver optimality of solutions for our clients. With our value principles of Integrity, Balance, Excellence and Innovation guiding us, we achieve success for our clients even in the most challenging of situations.

We hold a Capital Markets Service Licence advising on Corporate Finance, issued by the Securities Commission, Malaysia and we are registered Consultants with the Ministry of Finance, Malaysia.

The Management

Mohammed Rashdan Yusof (Managing Director)
Rashdan was one of the two co-founders of BinaFikir Sdn Bhd, and has been its Managing Director since 1st June 2004. His experience portfolio encompasses strategic advisory, corporate and industry restructuring and structured products. He was instrumental in the design of the innovative restructuring solution for MAS in 2002, widely known as the Widespread Asset Unbundling (WAU) restructuring. The WAU restructuring solution won the Deal of the Year 2002 from The Edge and the Asian Corporate Finance Deal of the Year 2002 from AirFinance Journal.

Feisal Zahir (Executive Director)
Feisal joined BinaFikir as an Executive Director in September 2004. Prior to this, he was a Vice President in Citigroup Global Market’s Investment Banking Division based in Hong Kong and Singapore (formerly named Salomon Smith Barney), where he was responsible for coordinating the M&A and capital markets business development efforts for key target clients in the Industrial sector in the Asian region.

Feisal has over 15 years experience in accounting, financial advisory services, corporate finance (including M&A) and corporate strategy.

KUALA LUMPUR: DAP wants to know if the recent RM5bil injection into ValueCap Sdn Bhd is in fact a “rescue package” to repay its RM5.1bil debt due in February next year.

DAP National Publicity secretary Tony Pua (DAP- PJ Utara) said that The Malaysian Insider (www.themalaysianinsider.com) had reported that ValueCap had a RM5.1bil debt to bondholders - the Employees Provident Fund (EPF), Khazanah, and Permodalan Nasional Bhd.

“The latest audited report of ValueCap in 2007 also confirmed that there is an existing ‘long-term deferred liability’ of that amount.

“We call upon the Finance Minister (Datuk Seri Najib Tun Razak) to come out with the truth if they are using the money to repay ValueCaps’s debts,” he told the press here on Tuesday.

He added that the underlying reason for the RM5bil injection was not known, but “it looks extremely suspicious”.

Pua explained that according to documents from the Securities Commission website, ValueCap had issued bonds on Feb 28, 2003 which would mature three years from the date of issuance.

It can be extended for another three years, as allowed in the terms of the bond in 2006.

“So now ValueCap is required to return the monies to the three bond holders come Feb next year.

”We find it very incidental that the Finance Minister had only recently announced an injection of RM5bil to ValueCap to support the flailing stock market.

“His statement can only be described as a half-truth,” he said.

He added that in addition, DAP demands a “full and immediate accountability of ValueCap investments since 2003”.

“We call upon the Finance Minister to withdraw the RM5bil injection which only serves to deal with the symptoms of the global financial crisis,” he said.