EXPERIMENTOS CON FENOCOPIAS

7 8 Authors interview with Wan Azmi, 13 :1: 1992

7 9 At the time Pemas held 13 per cent o f Nanyang while Kuok Bros and SEA Housing each held about 6 per cent with minority stakes held by a variety o f other small investors (FEER, 12:4:1990). 80 Authors interview with Wan Azmi, 13:1:1992.

81 Wan Azmi's company, General Lumber, made a profit o f $12.7 million on the sale (The Star, 9:2:1991).

Renong group.82 So while UMNO eventually extended its control, albeit indirectly, over

Nanyang Siang Pau, it would nevertheless seem mistaken to characterise Wan Azmi's

role in that exercise as that of an UMNO proxy.

Clearly Wan Azmi has benefitted from state support but, at the same time, he has successfully capitalised on the opportunities afforded by such support A notable example in that regard concerned the restructuring of the American-controlled RJ Reynolds Tobacco Company. RJ Reynolds was under pressure from the Malaysian government to indigenise its equity to conform to NEP guidelines by the end of 1990. Wan Azmi orchestrated a rather complex deal which involved the rejuvenation of a listed, but previously moribund, company called Juara Perkasa Corp (JPC), and the Malaysianization o f RJ Reynolds through a reverse takeover. On that occasion luck, a willingness to risk his own capital, and strong links with the authorities all combined to serve the interests of both Wan Azmi/JPC and RJ Reynolds. In essence, RJ Reynolds was able to Malaysianize its operations, obtain a listing on the KLSE within six months of the merger, and remit $230 million back to its head office, while Wan Azmi made a handsome profit. For an outlay of $10 million he obtained a 14.5 per cent stake in a company with a net worth o f $261.5 million (Asiamoney, March 1991). (A synopsis of the deal is given below.)83. So while state backing has been a 'facilitator' in Wan Azmi's corporate rise - importantly, as in the RJ Reynolds/JPC deal - he has capitalised on that

82 In December 1989 Jaguh Mutiara Sdn Bhd, a company owned by the Fleet group, obtained a substantial 23.8 per cent stake in Hume Industries. Later the Fleet group was subsumed within the Renong group. See chapter 4 and The Star, 6:4:1991.

83 In February 1990 Wan Azmi, through his family holding company, Rohas Sdn Bhd, acquired a loss­ making but publicly-listed company called Juara Perkasa Corp (JPC). Originally he had been considering a co-operative arrangement with the Hong Leong Group to revitalize JPC but, with Quek Leng Chan's agreement, called off the arrangement when he was approached by the RJ Reynolds which had to restructure its equity so as to conform to the NEP’s requirement of 30 per cent ownership in Bumiputra hands by 1990. In essence, the deal structured largely by Azmi involved four steps. First he converted JPC's $8.7 million debt to equity and then purchased J & P Coates, an associate of JPC for $5.7 million. Secondly JPC purchased RJ Reynolds Sdn Bhd issuing 250 million new JPC shares to parent RJ Reynolds (New Jersey). In the reverse take-over, JPC became a 95.6 per cent subsidiary of RJ Reynolds (New Jersey). Third RJ Reynolds (New Jersey) divested 29.6 per cent of its share in JPC and remitted $230 million to the parent company. Finally, RJ Reynolds (New Jersey) agreed to sell another 6 per cent a year later. With a 60 per cent stake, the company completed its Malaysianization. Ultimately Wan Azmi held 14.5 per cent of JPC with 5.5 per cent going to Bumiputra institutions and 10 per cent to the Malaysian public (Asiamoney, March 1991). See also MB, September 16-30 1990. According to Azmi (author’s interview, 13:1:1992) the details and share prices involved in the deal as related by Asiamoney were essentially correct.

support and, as one Kuala Lumpur investment banker observed, 'Wan Azmi now carries a lot of weight on his own. His survival isn't dependent on someone else'84

Wan Azmi's status as a corporate player in his own right was well illustrated by the role he played in the battle for a billion dollar housing project, called Sri Damansara, on the outskirts of Kuala Lumpur. The details of that rather complex three-way deal between Wan Azmi and two Chinese tycoons Lim Thian Kit (T K Lim) and Vincent Tan are given later in the study.85 However, an outline of the story here, from Azmi's perspective, will serve to show the complementary character of the relationship between the new Malay and Chinese business groups and their com m on and close relationship with the governm ent

By 1990 Sri Damansara was owned by a company called Magnum Corporation which had been acquired by T K Lim in the course of his takeover of the M CA's former investment arm, Multi-Purpose Holdings Bhd (MPH). Vincent Tan, another prominent mem ber of the new generation of Chinese tycoons to emerge in the 1980's, was - through his company the Inter-Pacific Industrial Group (Inter-Pac) - the other major shareholder of Magnum. A corporate tussle ensued between Lim and Tan for control of Magnum. Tan applied pressure on two fronts - on the one hand by increasing his stake in M agnum, and on the other by 'posturing' (Azmi's phrase), that he had more political clout than Lim.86

Already burdened with large debt, Lim turned to Azmi both for capital and political clout in his bid to avoid an entire sell-out of Magnum/Sri Damansara to Tan. At that point Azmi played a pivotal role in structuring a deal in which all the parties, though himself in particular, gained handsom ely. In essence Azmi acquired Sri D am ansara from Lim/Magnum for $200 million in a share swap as a result of which Lim/Magnum became a substantial shareholder in one of the leading Bumiputra conglomerates, Azmi's Land and General. The deal also doubled Land and General's paid-up capital and gave Azmi a 'call option' that allowed him to purchase from Magnum whatever it held in excess of 20 per cent o f Land and General's expanded share base. In effect this meant that while

84 See FEER, 19:10:1989 (Jonathan Friedland, Malaysian Entrepreneur turns around General Lumber: Out o f the Woods').