Singapore Media Watch

Tuesday, October 17, 2006

Shin Corp Deal: Temasek complied with Thai laws

Straits Times FORUM
17 OCTOBER 2006

I REFER to the letter "Did Temasek take unnecessary risk?" (ST, Oct 14).

As a long-term international investor, Temasek complies fully with the laws and regulations in different jurisdictions we invest in.

Our investment in Shin Corp in Thailand is no different. It was based on commercial principles and was consistent with best practices in international mergers and acquistions.

Following advice from our legal and financial advisers, the consortium, which included Thai co-investors, completed its purchase and General Tender Offer in accordance with market practices and in compliance with the laws and regulations of Thailand, including guidelines imposed by the Securities and Exchange Commission.

Our investment in Shin Corp was not predicated on which government was in power. Temasek is investing for the long term, and therefore factors possible changes in government in our investment considerations.

In March, almost all of the remaining shares were tendered to the consortium at the close of the General Tender Offer. Post the tender offer, the consortium owns 96 per cent of Shin Corp. This was far beyond anyone's expectations.

The consortium has said that it would like to keep Shin Corp listed on the Stock Exchange means that we would like to reduce our shareholding in Shin Corp at the appropriate time and in an appropriate manner for orderly market conduct.

This intention remains unchanged. Indeed, Temasek believes it is good for listed companies to have a healthy float of retail public and strong institutional shareholders.

As an investment house anchored in Asia, we are convinced it makes sense for us to re-invest in Asia to grow together. We look forward forward to playing a constructive role as a responsible long-term investor in the various communities in the region.

Myrna Thomas (Ms)
Managing Director
Corporate Affairs
Temasek Holdings


Our Review

For those who have read the latest Thai reports from the Bangkok Post and The Nation, the reply from Myrna Thomas fail to answer important quesions raised in the reports. Neither were there any news coverage from the local media.

The gist of the above to letter is to reiterate Temasek's stance that it has compiled fully with all Thai laws and regulations and in the purchase and to exonerate itself from the purchase of Shin Corp due to "unpredicatable" factors such as change in government.

However, there are still many questions unanswered:

1. The Commerce Ministry's Business Registration Department in Thailand has found that Temasek relied on nominees to skirt a legal ban on foreign companies owning more than 50 per cent of a telecom business." This controversial and pending question was not answered by Temasek or reported in the local media.

2. According to a Singapore investment banker interviewed by the Thai daily, The Nation, Temasek is willing to pay a fine or make other concessions in order to end the controversy rather than allow the issue to drag on. Again, this was not addressed or mentioned.

3. We find this remark baffling and contradictory: "Our investment in Shin Corp was not predicated on which government was in power. Temasek is investing for the long term, and therefore factors possible changes in government in our investment considerations." Are political risks assessed properly before the purchase was made?

4. "Temasek believes it is good for listed companies to have a healthy float of retail public and strong institutional shareholders." Is it aware that through its Thai proxies, it has effectively owned more than the mandated 49% of Shin Corp shares as stipulated by Thai law?

5. If Temasek reduced its holding in Shin Corp from 96 per cent to 49 per cent by selling some 1.5 billion shares, it would suffer a huge loss. It paid Bt49.25 a share, for a total of Bt140 billion-Bt150 billion, but now Shin Corp is trading on the stock market at Bt28.25 a share. Ms Thomas did not comment on the paper loss suffered by Temasek nor did she provide us with a glimpse on how Temasek intend to recoup the loss other than the customary "long-term investment" explanation.

Just as shareholders of a public-listed company have the right to question the board's management of the company, Temasek, as a government investment firm, should be subjected to the same kind of scrutiny by Singaporeans who are de facto its real stakeholders.

Do you have other questions to ask regarding the above reply from Temasek? Please share with us your thoughts here.

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