UEM Group Bhd has received at least four bids or offers to purchase its stake in Time Engineering Bhd, with prices ranging from 20 sen to 40 sen a share, sources said.
It is not clear how much of its 45.03% equity interest UEM is looking to part with, but a sale of more than 33.3% could trigger a mandatory general offer, if a waiver is not obtained.
The sources said the internal deadline for UEM to make a decision on the stake sale had been pushed back to the end of this month or early August.
Time Engineering officials declined to comment on the planned sale when contacted by The Edge Financial Daily.
A source said the bidders included an ICT company, which is interested in Time Engineering’s 27.1% stake in Time dotCom Bhd (TdC).
Last Thursday, Time Engineering announced that it had disposed of some 40.3 million TdC shares for RM20.83 million, which works out at about 51.7 sen apiece.
Time Engineering had received its shareholders’ mandate in July 2009 to sell its entire stake in TdC at no less than 48 sen a share.
The TdC shares are at present pledged to Bank Pembangunan as security for loan stocks issued by Time Engineering to satisfy some RM342 million of debt to the bank.
As at end-March this year, Time Engineering owed Bank Pembangunan some RM305.61 million, according to the company’s balance sheet.
TdC’s share price has been steadily rising, hitting a 28-month high of 54.5 sen last Friday.
UEM has denied that an announcement about the sale of its stake in Time Engineering will be made this week, refuting news reports last week.
According to its announcement to Bursa Malaysia last Friday, Time Engineering itself, responding to an article in The Edge Financial Daily, said it had not received any “formal notification” from UEM regarding the disposal of the latter’s 45.3% stake in the company.
Time Engineering, once the high-flying ICT arm of the debt-ridden Renong Group, saw its fortunes dwindle after the group was forced to dispose of its assets to UEM in a controversial rescue of the ailing conglomerate.
The company subsequently fell into PN17 status in 2008, resulting in many quarters writing it off. However, a subsequent turnaround in 2009 caught many by surprise.
Time Engineering restructured its debts, started securing projects overseas and managed its costs, resulting in a small profit in 2009.
Much of these improvements were attributed to current CEO Steven Lim Kee Seng.
Time Engineering paid a cash dividend for the first time in 13 years this year, raising hopes of investors that the worst is behind it.
In terms of valuation, Time Engineering’s key assets include the Dagang.Net group of companies, which has been appointed the service provider to develop the country’s National Single Window trade facilitation system by the finance ministry.
The source told The Edge Financial Daily that Time Engineering had received a bid to sell its 71.25% stake in Dagang.Net for RM90 million, but that was turned down, as the bid was too low.
Time Engineering’s stake in TdC is also seen as a valuable asset, particularly now as the latter’s share price has been rising.
At last Friday’s price of 54.5 sen per share, Time Engineering’s 27.3% stake or 685.9 million shares was worth RM373.8 million.
Time Engineering also has about RM100 million in cash, and no debts, except for the loan stocks issued to Bank Pembangunan.
The source said the valuation of the tangibles alone would price the company at between 20 and 30 sen, but this does not take into consideration the future revenue of the company.
Time Engineering is also understood to have amassed an orderbook of some RM1 billion, silently and steadily bagging jobs abroad.
Given the stiff competition and rapid changes in the ICT industry, UEM has never been able to realise the Time Engineering group’s potential.
In view of improving conditions and suitors at its doorstep, could this now present the right opportunity for UEM to finally dispose of the Time Engineering group, in line with the government’s asset disposal plan?
Written by Fong Min Hun & Jose Barrock
This article appeared in The Edge Financial Daily, July 19, 2010.
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