Wednesday, December 13, 2006

Temasek's Thai Blunder, Part 3

Singapore government investment arm Temasek Holdings has suffered another setback in Thailand following its disastrous foray in acquiring Shin Corp from former Thai prime minister Thaksin Shinawatra this year.

The highest court in Thailand today ordered iTV, which is under Shin, to pay unspecified fines that could lead to the bankruptcy of the country's sole private TV station.

From the website of Bangkok Post today:
iTV loses case - faces fine, bankruptcy
(dpa) - The Supreme Administrative Court this afternoon ruled against iTV - the country's sole private TV channel - in forcing the now Singapore-owned company to pay a higher concession fee and fines. The ruling is likely to bankrupt the operation.

The verdict upheld a decision by the Central Administrative Court of May 9, 2006, that forces iTV to change the news content to 70 per cent, up from 65 per cent, and pay a higher concession fee to the government.

The decision, which was not appealed by iTV, could force the company to pay a fine of up to 94 billion baht ($2.6 billion), effectively bankrupting the company which is now majority-owned by Temasek Holdings, the investment arm of the Singapore government.

ITV was previously owned by Shin Corp, the family-held business conglomerate of former Thai prime minister Thaksin Shinawatra, which sold its 49 per cent holding in Shin Corp to Temasek Holdings for 1.9 billion dollars, tax free, on January 23 of this year.

The purchase outraged many Thais who saw the Shin Corp sale as handing over sensitive nationals assets to a foreign company. Besides iTV, Shin Corp also ran the country's largest mobile phone service and the national satellite network.

Four months after the Temasek purchase of Shin Corp, when the political tide was moving against Thaksin, Thailand's Central Administrative Court overturned an arbitration panel's 2004 decision to lower iTV's concession fee and its news content to 65 per cent. Entertainment shows earn higher advertisement revenue in Thailand.

The iTV saga is rich in recent Thai political history. The channel was intended to be an independent news station providing the public with unbiased reporting. All other TV stations in Thailand are owned by the state.

However, after running into financial difficulties in the wake of the 1997 economic crisis iTV was snapped up by Shin Corp and turned into a pro-government station when Thaksin came to power in 2001.

Please see earlier postings on Temasek's blunders in Thailand. Some observers reckon that the series of missteps in Thailand may have cost Temasek's top deal maker his job.

The Straits Times, 7 Dec 2006
Temasek changes chief investment officer

TEMASEK Holdings has replaced its all-important chief investment officer, who oversees all of the Singapore firm’s investment decisions.

A check by The Straits Times on Temasek’s corporate website shows that senior managing director Jimmy Phoon has taken the reins from Mr Charles Ong. Mr Ong, also a senior managing director, has assumed the newly-created role of chief strategist.

The move comes as Temasek continues to grapple with its controversy-hit US$3.8 billion (S$5.87 billion) takeover of Thailand’s Shin Corp earlier this year.

It led a group of Thai investors to buy a 50 per cent stake in the telecoms company from the family of former Thai premier Thaksin Shinawatra. The transaction eventually led to a mandatory general offer which saw Temasek and its partners emerge with 96 per cent of Shin.

The acquisition, seen by many Thais as a sell-out of strategic national assets to foreigners, was at the heart of widespread protests in the country. These culminated in a September military coup that toppled Mr Thaksin.

Temasek said yesterday that the senior management moves were not related at all to the Shin deal but were “part of regular and ongoing corporate development efforts”.

The iTV problem is definitely not the end of Temasek's woes in Thailand although Singapore politicians have been trying to defend Temasek and mend fences with Thailand following the Shin debacle.

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