Why take equity instead of cash?
James LeePublished: Mar 21, 2001 11:25 PM | Updated: Jan 29, 2008 10:21 AM
I am writing in response to the letter by Mohd Fazil Mohd Ali ([#1]Be fair to EPF[/#], March 20) and would like to point out a few points.
With due respect, it is the writer himself who should check his facts. By now, all Malaysians should have learnt to take 'clarifications' and 'explanations' emanating from the mouths of our politicians and civil servants with a healthy (nay, extreme generous) dose of scepticism and distrust.
From the published Composite Scheme of Arrangement, EPF belongs to Time dotCom's Scheme D, i.e. those creditors secured only by Time Engineering Bhd's corporate guarantee. Why did EPF agree to this kind of security in view of the huge amount loaned out, is anybody's guess. Anyway, those creditors that belong to Time dotCom's Scheme D will be 'paid' through 'Notes' issued by Time Engineering. Notes are basically two-year zero coupon redeemable promissory notes. In other words, EPF will be paid back in cash eventually.
In fact, if I am not mistaken, in the proposed Composite Scheme of Arrangement, most creditors will eventually receive cash, either via Notes or irredeemable convertible unsecured loan stocks (Iculs). The sources of the cash will be the listing of Time dotCom and the injection of fresh capital by some white knight in shining armour (I am still awaiting for the arrival of this knight with bated breath). That's how most creditors were persuaded to agree to the arrangement and eventually receiving the court's sanction. A debt-to-equity proposal would have been thrown out of the window in no time.
Thus, I am surprised to hear of EPF's so-called clarification. And I am flabbergasted to hear of its agreement to receive equity instead of cash while all other creditors would not even touch the equity with a 10-foot pole.
So many questions are begging acceptable answers. As one of the faithful EPF contributors, I have a right to be told the truth, to be assured that all the fruits of my toil and sweat will not dissipate in dubious financial shenanigans.
With due respect, it is the writer himself who should check his facts. By now, all Malaysians should have learnt to take 'clarifications' and 'explanations' emanating from the mouths of our politicians and civil servants with a healthy (nay, extreme generous) dose of scepticism and distrust.
From the published Composite Scheme of Arrangement, EPF belongs to Time dotCom's Scheme D, i.e. those creditors secured only by Time Engineering Bhd's corporate guarantee. Why did EPF agree to this kind of security in view of the huge amount loaned out, is anybody's guess. Anyway, those creditors that belong to Time dotCom's Scheme D will be 'paid' through 'Notes' issued by Time Engineering. Notes are basically two-year zero coupon redeemable promissory notes. In other words, EPF will be paid back in cash eventually.
In fact, if I am not mistaken, in the proposed Composite Scheme of Arrangement, most creditors will eventually receive cash, either via Notes or irredeemable convertible unsecured loan stocks (Iculs). The sources of the cash will be the listing of Time dotCom and the injection of fresh capital by some white knight in shining armour (I am still awaiting for the arrival of this knight with bated breath). That's how most creditors were persuaded to agree to the arrangement and eventually receiving the court's sanction. A debt-to-equity proposal would have been thrown out of the window in no time.
Thus, I am surprised to hear of EPF's so-called clarification. And I am flabbergasted to hear of its agreement to receive equity instead of cash while all other creditors would not even touch the equity with a 10-foot pole.
So many questions are begging acceptable answers. As one of the faithful EPF contributors, I have a right to be told the truth, to be assured that all the fruits of my toil and sweat will not dissipate in dubious financial shenanigans.
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