MASSIVE RM114M LOSSES BY EX-CM

Massive RM114m losses by ex-CM

Kota Kinabalu: Warisan Harta Sabah has recovered from a disastrous share swap deal executed during the chairmanship of a former Chief Minister in December 1997, said Chief Executive Officer, Datuk Haji Rahman Ghani.

He said the share swap was carried out despite a Director, representing the State Finance Ministry, expressing strong reservations.

As a result of the transaction, Warisan Harta Sabah suffered substantial losses. During its financial year of 2000, Warisan Harta Sabah estimated its losses amounted to RM114 million mainly as a result of this transaction.

Speaking at its annual general meeting (AGM) here, Monday, Rahman said Warisan Harta, the State Government's investment arm, was hurt in the share swap of its very strong blue chip counter, MISC shares, in exchange for the shares of North Borneo Timber Corporation (NBT), a trading company and the shares of Sugarbun Corporation Berhad (Sugarbun), a fast-food company.

The deal involved 32 million MISC shares - disposed of at RM5.70 per share valued at RM182.4 million in exchange for 3 million NBT shares transacted at RM32 per share valued at RM96 million and 4.76 million Sugarbun shares transacted at RM7.60 per share valued at RM36.176 million.

He said NBT was de-listed when it was trading at 19 sen per share and Sugarbun (now changed to Borneo Oil) is trading at 14.5 sen.

The huge losses were and continued to be a big blow to Warisan Harta Sabah's financial position and it was estimated that Warisan Harta Sabah had registered unrealised losses exceeding RM200 million not including profits derived from any bonus issue, rights issue of shares, price appreciation and dividends declared by MISC.

He said Warisan Harta Sabah had taken legal action against Suniwang Holdings Sdn Bhd for breaching a condition of the Sale of Shares Agreement, in particular, the "Put Option" that was emplaced to protect Warisan Harta Sabah's interest.

However, in November 2001, a winding up order was issued against Suniwang and subsequently Warisan Harta Sabah submitted its claims against the company through the Official Assignee.

Nonetheless, Rahman said under the present State leadership, Warisan Harta managed to chalk a net profit of RM26.3 million compared to RM9.8 million in 2008.

At group level, Warisan Harta Sabah recorded a net profit of RM65.9 million compared to RM28 million in 2008.

In addition to this, the shareholders of Warisan Harta Sabah also approved a final dividend of RM12 million to be distributed to the State Government of Sabah for the financial year ended 31 December 2009.

Until now, Warisan Harta Sabah had declared a total dividend amounting to RM97.1 million to the State Government as the sole shareholder of Warisan Harta Sabah, he said.

"Since 2000, Warisan Harta Sabah had recovered its losses following the share swap transaction É the remarkable recovery has been made possible with the guidance and foresight of the present leadership including the backing and cooperation by the State Government."

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