Both Telenor’s DIGI.com Berhad (DIGI : stock-code 6947) and loss-making Time DotCom Berhad (TIMECOM : stock-code 5031) were suspended from trading today, Monday, and rumors quickly spread again that DIGI.com is buying into Time DotCom on a share-swap. The last trading price of DIGI.com was RM23.60 a share while Time DotCom’s stock price was RM0.87 per share before the suspension.
Based on the last stock prices, 1 share of DIGI.com would fetch about 27 shares of Time DotCom. Telenor which was given a year extension earlier must now cut its holdings to 49 per cent from 61 per cent currently by end of 2007. With floating shares of 750 million in the stock market, a 12 percent stake from the selldown to swap shares with Time DotCom would worth RM2.124 billion.
Time DotCom on the other hand has 2,530,775,000 floating shares worth a total RM2.201 billion. Hypothetically, let’s say Khazanah Nasional Bhd is willing to dig into its own deep pocket for RM2.124 billion for the 12 percent stake and inject it into Time DotCom. Assuming Khazanah is forcing its own direct 30% in Time DotCom to DIGI.com with a 50% premium of the last trading price. That would means DIGi.com needs to cough up RM991 million. Khazanah still owns 45% in Time Engineering which in turns own 40% in Time DotCom (not the latest figure).
Put the whole deal in a share-swap and Khazanah needs to pay up RM1.133 billion to ensure Time DotCom owns 12 percent in DIGI.com. This will translate into a situation whereby Time DotCom could enjoy the fruits of profit from DIGI.com, not to mention the ability to pay its’ debts, while DIGI.com could leverage on Time DotCom’s 3G license. To further bargain for a better price, DIGI.com could be force to pay higher premium using the 3G as the excuse.
Assuming again that somehow DIGI.com is required to pay 100% premium for Time DotCom, a 30% stake in the latter will cost RM1.32 billion and Khazanah needs to pay only RM804 million.
Other Articles That May Interest You …
- Who’s the New Buyer for 12% stake in DIGI.com?
- What if Telenor refuse to sell-down DIGI.com?
- DIGI – If You Can’t Beat Them, Suck the Coffer Dry
# Update (Tuesday 13th Nov 2007 15:02pm): Reuters reported that DiGi has agreed to form strategic and equity tie-ups with broadband telecommunications firm Time dotCom Bhd, allowing DiGi access to Time’s prized 3G spectrum. Time DotCom said it also received an offer from DiGi’s parent, Telenor, to buy a stake in DiGi via a share placement to help DiGi comply with Malaysian equity rules. Both companies have announced the alliance in statements to Bursa Malaysia today.
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November 12th, 2007 by financetwitter
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