Last of Temasek’s power units sold for $3.8 billion to Malaysian company

Last of Temasek’s power units sold for $3.8 billion to Malaysian company 

Surprise sale of PowerSeraya to YTL Power unit after ‘unsolicited proposal’ 

By Gabriel Chen 
  
TEMASEK Holdings has stunned the market by announcing that it has sold electricity generator Power-Seraya to a unit of Malaysia’s YTL Power International for $3.8 billion.
This came just a week after the Singapore investment company said it would shelve tender plans for PowerSeraya, owing to ‘market conditions’.

Market talk had suggested that relatively poor investor interest and lower-than-expected indicative bids by investors had led to Temasek’s earlier decision.

Temasek said in a statement yesterday, however, that Sabre Energy, a wholly-owned unit of YTL Power, would pay $3.6 billion for PowerSeraya and assume $201 million of its adjusted net debt as at March 31 this year.

The transaction for PowerSeraya - the third and last of the electricity generation companies (gencos) to be sold by Temasek - is expected to be completed early next year.

In June last year, Temasek announced it was selling the three gencos to liberalise the power generation industry. It had targeted to complete the sale by the middle of next year.

Ms Gwendel Tung, Temasek’s director of investment, said yesterday that after the company put a stop to the tender process last week, YTL Power submitted an ‘unsolicited proposal’ that met Temasek’s requirements.

Referring to YTL Power, Ms Tung said: ‘We are confident that their expertise and experience will add significant value to Singapore’s electricity market and PowerSeraya in particular.’

Other factors may have also come into play. One possibility, suggest industry watchers, is that the funds will come in handy in helping cushion losses from other investments that have soured amid the global financial crisis.

They say another possibility concerns Temasek’s outlook on market conditions. Temasek might have worried that, with asset prices declining rapidly, it might not have been able to secure such an ‘acceptable’ price again had it ‘procrastinated’.

Temasek’s other gencos fetched higher prices. Tuas Power went to Chinese firm Huaneng for $4.23 billion. Senoko Power, meanwhile, was sold to a consortium led by Marubeni Corp for $4 billion.

A third theory concerned the other bidders for PowerSeraya, which were said to be a Hong Kong CLP Holdings-led consortium and Bahrain’s Arcapita.

Due to deteriorating market conditions, and with banks taking more precautions on lending, Temasek might have been concerned over whether these bidders would face difficulties in financing the deal.

Temasek declined yesterday to comment on the talk and also declined to provide the names of the shortlisted bidders.

The sale of the three gencos is aimed at liberalising the power generation industry. Private ownership can trigger stronger competition, possibly leading to lower costs and lower electricity prices.

The acquisition of PowerSeraya is not YTL Power’s first foray into Singapore-based assets.

Its parent company, YTL Corp, owns majority stakes in two Sentosa Cove projects. In November last year, the group made history here by paying $2,525 per sq ft per plot ratio for Westwood Apartments in Orchard Boulevard - the most expensive site to be sold collectively.

YTL Power managing director Francis Yeoh said the 3,100MW of licensed capacity operated by PowerSeraya would give YTL Power ’significant participation’ in the Singapore energy market.

YTL Power believes its participation in Singapore’s electricity market will put it in a prime position to contribute towards the liberalisation of the Malaysian electricity market.

Source : Straits Times - 03 Dec 2008

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Thai ruling parties dissolved - Thailand

Thai ruling parties dissolved  - Thailand

Somchai banned from politics for five years; protests called off 

By Nirmal Ghosh, Thailand Correspondent 
  
Mr Somchai accepted the verdict, although his party called it a judicial coup.

BANGKOK: Thailand’s Constitutional Court yesterday dissolved three top ruling parties for electoral fraud and banned the prime minister from politics for five years, leaving the government clinging to office by a slender thread.
The ruling came against a backdrop of intense pressure from the right wing, royalist People’s Alliance for Democracy (PAD) which has been strangling Thailand’s economy by staging months-long protests and seizing Bangkok’s two airports last week.

The anti-government group said hours after the verdict that they would end all their rallies today.

‘The People’s Alliance for Democracy has agreed to cease protesting after a long-running 192-day campaign. We have won a victory and achieved our aims,’ PAD leader Sondhi Limthongkul told a news conference.

He said all protesters would start pulling out of Suvarnabhumi and Don Muang airports at 10am today.

On hearing the court’s decision, thousands of PAD supporters at Suvarnabhumi International Airport cheered.

Airport officials said Suvarnabhumi reopened to cargo flights yesterday and will resume operations on Friday.

With the dissolution of the ruling People Power Party (PPP) and two smaller coalition partners came a ban for five years on executives of the parties including Prime Minister Somchai Wongsawat.

The PPP now technically no longer exists, repeating the fate of its precursor the Thai Rak Thai, which deposed former premier Thaksin Shinawatra had converted into a political powerhouse.

Mr Chat Chonlaworn, head of the nine-judge panel, reading the verdict, said: ‘As the court unanimously decided to dissolve the PPP, therefore the leader of the party and party executives must be banned from politics for five years.’

‘Although some party executives had no knowledge of the election fraud, the law stipulates clearly… the party must scrutinise its executives, thus the party cannot deny responsibility.’

Deputy prime minister Chavarat Charnveerakul is acting prime minister and Parliament will choose a new PM next week.

Meanwhile a caretaker Cabinet will run the country. Out of 36 Cabinet members, 22 are not affected by the party dissolution and can continue in office.

In a statement, the PPP called the verdict a ‘judicial coup’ but Mr Somchai accepted the outcome, saying: ‘It is not a problem. I was not working for myself. Now I will be a full-time citizen.’

A PPP source said Mr Thaksin, apparently in Cambodia, was ‘angry and frustrated’.

PPP MPs who have not been banned will switch to Puea Thai, a shell party. The coalition partners are expected to stick together. There is a possibility of more conflict with the PAD if the next premier is seen again as a proxy for Mr Thaksin.

Mr Sondhi warned yesterday: ‘The PAD is ready to take to streets if people from the Thaksin regime return or if there is any government that tries to amend the Constitution and curtail the power of the monarchy.’

There are also fears of a violent backlash by government supporters.

Emotional scenes were played out outside the courthouse yesterday when some 3,000 pro-government ‘red shirts’ turned up and hurled abuse at a squad of armed soldiers. Some even caught one soldier and threw him out of the compound.

Some 7,000 ‘red shirts’ continued to rally at Bangkok’s metropolitan administration last night, police said.

‘The judgment was fixed,’ said pro-government businesswoman Rojarek Phalaburee from Chiang Mai. ‘We will continue to join the protest.’
Source : Straits Times - 03 Dec 2008

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Singapore market pulls in US investors as crisis deepens

Singapore market pulls in US investors as crisis deepens

Q3 saw net US$543m of S’pore stocks bought, reversing net sale in Q2
By CHUANG PECK MING

AS the financial crisis deepens at its epicentre in the US in the third quarter, investors there - those still with cash to spare - appear to have taken cover in some selective markets abroad, including Singapore.

 
The latest figures released by the US Treasury show that US investors snapped up a net US$543 million worth of stocks listed on the Singapore Exchange (SGX) in the July-September quarter (Q3), reversing a net sale of US$897 million in Q2 and US$960 million in Q1.

US investors had sold a net US$347 million of their Singapore holdings in August, but made a net purchase of US$1.44 billion in stocks in July, which helped made them a net buyer of Singapore stocks in Q3.

SGX stocks were one of the biggest purchases made by US investors during the quarter, even when they were unloading their global stock holdings, including those from Asia, as the financial crunch spread.

Only in Brazil (purchases of US$4.36 billion), Spain (US$1.13 billion), Ireland (US$886 million) and Argentina (US$704 million) did US investors spent more on stocks, outside the tax-haven Caribbean region.

Within Asia, apart from Singapore, US investors were net buyers only in the Chinese (US$250 million), Indonesian (US$11 million) and Thai (US$89 million) stock markets.

Analysts offered one possible explanation for why US investors were buying in these markets when they were selling everywhere: these markets offered better bargains as prices fell.

Stock prices plunged by almost 20 per cent quarter-on-quarter in Q3 in Singapore, 22.39 per cent in Thailand and 21.99 per cent in Indonesia. They dropped 16.7 per cent in China.

But while stock prices in Singapore, Thailand and Indonesia fell more than in markets such as South Korea (-13.54 per cent) and Japan (-16.48 per cent), where US investors dumped US$3.53 billion and US$10.22 billion worth of stocks respectively, they fell no greater than in other major Asian markets.

Prices in the Hong Kong stock market tumbled 18.9 per cent, while those in Taiwan went down by 23.98 per cent. And US investors disposed of a net US$8.59 billion of stocks in Hong Kong, and US$881 million in Taiwan.

Another explanation is that US investors are more upbeat on the long-term prospects of China, Singapore, Indonesia and Thailand.

Still, when Lehman Brothers sank in September, leading to the massive sell-off on Wall Street which wiped out 25 per cent of the value of US stocks in the first two weeks of October, US investors were ready to abandon the Singapore market. That month, they sold a net US$553 million of SGX-listed stocks.

On the whole, US investors off- loaded a net US$24.48 billion worth of stocks in Asia in Q3, with Japan accounting for 41.7 per cent of the total sales. These followed net sales of US$5.72 billion in Q2 and US$3.52 billion in Q1.

Worldwide, excluding the US, US investors posted net stock sales of US$17.91 billion in Q3, after mopping up a net US$16.78 billion in Q2.

By region, only in the Caribbean and Latin America were US investors net buyers of stocks in Q3, picking up US$21.85 billion and US$4.55 billion respectively.

 
Source : Business Times - 03 Dec 2008

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Airport siege set to end as Thai PM resigns - Singapore

Airport siege set to end as Thai PM resigns - Singapore
(BANGKOK) Thailand’s Prime Minister Somchai Wongsawat resigned yesterday after weeks of protests that paralysed his government and closed the capital’s airports. Cargo flights resumed and protesters promised to lift their siege by today.
 
Opposition’s win: People’s Alliance for Democracy activists celebrating at the besieged Suvarnabhumi airport in Bangkok yesterday after a court ruling brought down the Thai government following weeks of protests 
The resignation of Mr Somchai came after the nation’s Constitutional Court dissolved Thailand’s top three ruling parties for electoral fraud and banned him from politics for five years. This is the second time in three months the judges have ousted a leader.

Mr Somchai, who has been forced to govern from the northern city of Chiang Mai since last Wednesday, accepted the ruling with equanimity. ‘It is not a problem. I was not working for myself. Now I will be a full-time citizen,’ he said.

Protest leaders said the airport seizures, which stranded 300,000 foreign travellers, would end today.

With the waning of the political crisis, the official in charge of Thailand’s airports said Suvarnabhumi International Airport will resume operations on Friday. ‘Please have confidence in us,’ said Vudhibhandhu Vichairatana, the chairman of the Airports of Thailand.

He said the flights will be a birthday gift for Thailand’s revered King Bhumibol Adulyadej, who turns 81 on Dec 5. The airport reopened to cargo flights yesterday.

But yesterday’s court ruling raised fears of retaliatory violence by supporters of the government, which could sink the country deeper into crisis.

‘It was the first time I have seen a court give a judgment so quickly after the closing arguments,’ said Vorajet Pakeerat, a constitutional law professor at Bangkok’s Thammasat University. ‘Many people will be angry at the decision as there was no due process.’

Thitinan Pongsudhirak, a political analyst at Bangkok’s Chulalongkorn University, said that the court ruling effectively ‘eliminated now almost a generation of Thai politicians’. Supporters of the three disbanded parties will also be furious with the verdict, he said, possibly stoking tensions in the kingdom.

Government spokesman Nattawut Saikau said his six-party coalition would step down.

Mr Somchai’s People’s Power Party, the Machima Thipatai party and the Chart Thai party were found guilty of committing fraud in the December 2007 elections that brought the coalition to power.

‘Dishonest political parties undermine Thailand’s democratic system,’ said Court president Chat Chalavorn.

The ruling sends Mr Somchai and 59 executives of the three parties into political exile and bars them from politics for five years. Of the 59, 24 are lawmakers who will also have to resign their parliamentary seats.

But lawmakers of the three dissolved parties who escaped the ban can join other parties, try to cobble together a new coalition then choose a new prime minister.

Until then, Deputy Prime Minister Chaowarat Chandeerakul will be the caretaker prime minister, said Suparak Nakboonnam, a government spokeswoman. She said Parliament will have to pick a new prime minister within 30 days.

Despite the appearance of a smooth political transition, the ruling is expected to widen the dangerous rift in Thai society that many fear could lead to violence between pro and anti-government groups.

In another development, Thailand has postponed an Asean summit scheduled for mid-December until March, a government spokesman said yesterday.

The summit had been scheduled for Dec 15-18 in Chiang Mai. It had already been moved out of Bangkok due to the turmoil. — AP, AFP, Bloomberg

Source : Business Times - 03 Dec 2008

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