Astro studying revamp proposals

By B.K. SIDHU and LEONG HUNG YEE

The exercise may include separation of overseas operations

KUALA LUMPUR: Astro All Asia Networks plc is considering various proposals to restructure the company in efforts to put in place an efficient capital and corporate structure. The exercise may include a separation of its overseas operations, as well as a possible one-time special dividend payoff.

At a press conference after the company’s AGM yesterday, deputy chairman and group CEO Ralph Marshall said the board had not decided on any of the proposals that its bankers had put forth and that no timeframe had been set for any possible restructuring.

Over the weekend, several media reports speculated Astro was considering a plan to divest its unprofitable international operations in a deal valued at about RM9bil.

The reports said Astro’s two main shareholders, privately-held Usaha Tegas Sdn Bhd and Khazanah Nasional Bhd, would buy the company’s unprofitable international operations in a deal which might see Astro paying a one-off dividend of RM1 per share.

The reports also suggested Astro would sell its Indian operations.

Marshall dismissed the reports as “pure speculation,” saying “it may include the separation of the international operations from the Malaysian operations but we do not know yet as the advisers are evaluating all the proposals.’’

Astro is under-leveraged and this gives us a great opportunity to establish a very robust capital structure for the future,’’ he said.

Astro shares reacted to the reports with the price rising to a 14-month high of RM3.68 when the counter resumed trading after a short suspension yesterday morning. The shares then succumbed to selling pressure in late afternoon and closed 20 sen lower on a volume of 11.7 million shares, making it the third biggest loser for the day.

Astro had bought over 20% of India’s Sun Direct TV (which offers 170 channels nationwide) two years ago and also owns and operates 23 FM radio stations in India.

In China, Astro has a marketing service company and Hong Kong Celestial Pictures which owns the Shaw Brothers film library.

In Indonesia, Astro is pursing all legal means to resolve issues arising from its venture there.

“A separation seems plausible and makes business sense but there is no way the Indian operations will be sold out of Astro group as India offers huge growth potential,” a source said.

“If parked under Astro, the Indian operations may need to be financially supported in the next four to five years, so a separation lifts that burden,’’ the source added.

Astro TV chief executive officer Rohana Rozhan said: “The Malaysian operations are clearly the cash-cow of the Astro group. Separating all the other overseas operations allows Astro to focus on its resources to grow and enhance returns from the Malaysian operations.’’

Astro has been evaluating proposals for some time now and to create an efficient capital and corporate structure, it can de-list from Bursa Malaysia, stay the way it is and support its overseas expansion or separate the overseas operations in India, Hong Kong and China by hiving them off to another company.

The major shareholders of Astro will own a stake in the company that will house the overseas operations.

As a sweetener for any such deal to go through, the shareholders need to be rewarded and that is why a one-time special dividend may well be in the offing.

T. Ananda Krishnan, via Usaha Tegas, may be repeating what he did for Maxis Communications Bhd where he de-listed Maxis to allow it to take on more debts to grow its Indian operations.

For Astro, it may or may not be de-listed, but the entry of new partners for the separate unit is not to be discounted so that it can fund its future expansion.