Temasek ‘ready to swallow its medicine’

The Nation
14 Nov 06

Temasek Holdings of Singapore is willing to swallow whatever loss on its investment in Shin Corp may come out of the Thai government’s review of foreign ownership laws, a source said.

Temasek is now waiting for the Thai government to come up with a decision on the nominee issue, the source – an investment banker close to the deal – said last week.

The Singaporean government also discussed the issue with Deputy Prime Minister MR Pridiyathorn Devakula during Prime Minister Surayud Chulanont’s official visit to the city-state last Thursday.

The two countries have agreed to sort out any misunderstanding that may arise out of the Shin deal to protect their sound relations.

“The Singapore side has agreed to look upon the Shin Corp deal as ‘commercial’. They are willing to take a loss on this deal. Whatever rulings emerge from the Thai authorities they are willing to follow,” the investment banker said.

Temasek is now under police investigation for the suspected use of nominees to circumvent the Thai foreign ownership law in its Bt140-billion takeover of Shin Corp.

Through Cedar Holdings and Aspen Holdings, Temasek bought 49 per cent of Shin from the Shinawatra and Damapong families before making a mandatory tender offer for the remaining shares. It now holds some 96 per cent of Shin.

But the foreign business law prohibits foreign investors from controlling more than 49 per cent of a telecom.

The Thai government has made it clear that it will not interfere in any probe related to the Shin deal, pointing out that it was a commercial transaction. Any dispute over the deal, according to Surayud, will have to follow the Thai justice process.

“Deputy Premier Pridiyathorn told Singapore that the Commerce Ministry’s ruling on the Shin nominee case would have to go through the normal screening process as fact,” the source said.

It has emerged during the investigation that a “Thai shareholder of Shin has received money from a tax-haven territory through a company registered in Singapore that he does not own”, the banker said.

Last week Commerce Ministry Krirk-krai Jirapaet told a gathering of foreign correspondents and businessmen that his ministry had formed a committee to study the foreign ownership law in connection with the use of nominees. Industries that can be liberalised will be liberalised, while those that are restricted will be safeguarded, he said.

But foreign investors need not worry about being penalised for their past use of nominees because authorities would give them time to comply with regulations in an orderly manner.

“Temasek, which has been monitoring the situation here closely, must feel relieved now. They understand what we are doing,” a Government House source said.

With the sensitive political angles to the Shin deal, Temasek will have a tough time finding a local partner or fund to help it divest its Shin holdings until the nominee law has been spelled out clearly.

“Everybody is afraid to get involved in this deal. Siam Cement has backed away from it,” a former finance minister said.

Besides seeing a huge chunk of its Shin investment wiped out if it has to cut its shareholding to the legal maximum, Temasek may suffer further if Shin’s flagship unit, Advanced Info Service, is found to have benefited from “policy corruption” under the previous administration.

The Assets Examination Committee is now looking into whether cellular operator AIS was given a sweetheart deal when TOT Plc agreed to lower its revenue-sharing formula with AIS in 2001, when the Thaksin Shinawatra government was in power.

Korn Chatikavanij, deputy secretary-general of the Democrat Party, has pointed out that AIS has already saved Bt17 billion from the revised revenue-sharing agreement.

And from now until the end of AIS’s concession in 2015, state-owned TOT stands to waive more than Bt80 billion.

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