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Web-only Exclusives
November 30, 2000

From Our Correspondent: Hirohito and the War
A conversation with biographer Herbert Bix

From Our Correspondent: A Rough Road Ahead
Bad news for the Philippines - and some others

From Our Correspondent: Making Enemies
Indonesia needs friends. So why is it picking fights?

Asiaweek TIME AsiaNow

In Debt?
Just make yourself a dotcom

January 25, 2000
Web posted at 5:30 p.m. Hong Kong time, 4:30 a.m. EST

Hello, Sure Thing
Mania is breaking out in, of all places, Singapore
by Assif Shameen
- Wednesday, Jan. 18, 1999

Net Valuations
Two Singapore case studies
by Assif Shameen
- Tuesday, Jan. 11, 2000

Millennium Meltdown
Asian stock markets slide, but let's put the mayhem in perspective
by Assif Shameen
- Thursday, Jan. 6, 2000

Have You Heard The One About. . .
Every investor loves a story -- with the Internet, they are coming faster than ever
by Assif Shameen
- Monday, Dec. 21, 1999

Forget Restructuring!
The Internet is the Asian financial story
by Assif Shameen
- Monday, Dec. 20, 1999

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Daily commentary from the editors of TIME Asia

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Each business evening with analysts around the region

Have you been running a deeply indebted company that has defaulted on its loans and is struggling to stay out of liquidation? Have your bankers been giving you sleepless nights? Have you been trying to sell off assets to pay back loans and found no one who'd give you even half your asking price? Well, fret no longer because the Internet can set you free! In fact, the Net can turn a poor ugly duckling into a wealthy prince.

That's how it has seemed for Time Engineering, one of Malaysia's most indebted listed companies. Time Engineering is part of the Renong Group, one of the country's best-connected companies, whose shareholders have ties to Finance Minister Daim Zainuddin and the leadership of dominant political group, UMNO. As a group Renong has a total of over 20 billion ringgit ($5.3 billion) in debts. Its 47%-owned affiliate Time Engineering alone is saddled with nearly 5 billion ringgit ($1.31 billion) in debts. In 1998, Time Engineering posted a loss of $605 million.

Last year's financial statements haven't been audited yet, but analysts say the losses are likely to be close to a hundred million. For 18 months now, the company has been trying to do a debt workout with bankers through the state-sponsored Corporate Debt Restructuring Committee (CDRC). The bankers and CDRC told Time to sell its assets to repay debts, and for more than a year the company has been trying to off-load its prized possession, Time Telecom, a subsidiary that owns a nationwide fiber-optic network as well as a small cellular service network. Time Telecom's main asset is its 3,600 km of fiber-optic trunk line laid alongside toll roads that parent Renong built and 1,600 km of submarine fiber cable surrounding peninsular Malaysia. Though fiber optics and broadband may be the in-thing, Time's assets haven't been much valued by the experts. Earlier this month, Time Engingeering's investment bankers, N.M. Rothschild & Sons Asia, advised it to sell Time Telecom to Singapore Technologies Group, who had participated an in open bidding process. The highest bid was reportedly just over $450 million. If Time Engineering had listened to its bankers and sold, it would still have over $950 million in debts and not much else to offer. If this happened, analysts reckon, Time Engineering's creditors might get no more than 35 cents on the dollar in a liquidation.

Then a week ago, Renong and Time Engineering did a dramatic about-face. There would be no asset sale. Renong boss Halim Saad (a protégé of Daim) and his close cigar-aficionado buddy Abu Talib Othman (who once served as Malaysia's attorney general) appointed themselves, respectively, CEO and chairman of Time Telecom. On Monday, Jan. 17, the company changed its name to TimedotCom, announced it would be an Internet player and said that TimedotCom would be listed. Where? The company didn't say, but rumors circulating in Kuala Lumpur have it that the highly indebted TimedotCom (previously known as Time Telecom) will be listed on NASDAQ.

Needless to say, the share prices of Time Engineering and its ultimate parent Renong have soared. Time Engineering's stock is one of the most heavily traded in recent memory in Malaysia, more than doubling in the past 10 days. Renong shares are up nearly 40%.

Halim, who is so shy that he normally walks away when he sees a journalist, has started giving lengthy interviews for the first time in his 18-year business career. TimedotCom has run an aggressive marketing and advertising blitz, touting itself as a major potential Internet play even though it does not yet have any operational Internet businesses to speak of. One ad says: "With its own unique potential [TimedotCom's] ballpark valuation is 14.69 billion" ringgit. That's $3.87 billion -- amazingly unique potential for a company whose investment bankers only last week advised a sale for a small fraction of that.

Halim has been telling analysts and bankers that Time has worked out a multipronged strategy to get out of trouble and harvest the fruits of the Internet. It would list TimedotCom, raising about 1.5 billion ringgit ($400 million) from its IPO. It would then issue new shares in three separate telecom units to its creditors as part of a debt-for-equity swap, which would retire a substantial portion of the debt.

Every day for the past week, there has been a new wrinkle added to TimedotCom story. It might merge with private station TV3. It might be join with the New Straits Times publishing group. It might acquire both NST, TV3 and the government-affiliated Internet Service Provider Jaring in an AOL-Time Warner kind of deal. TimedotCom's PR machine is churning out press releases daily. Its number of phone subscribers can easily double this year, says one. TimedotCom can notch up 400,000 Internet subscribers this year when it launches its own Internet service provider, says another. It could spearhead mega-mergers involving all major government-affiliated telecom, Internet, software and related companies goes yet another. And TimedotCom could be the next (take your pick) Softbank or Pacific Century CyberWorks. Even in the overhyped world of Internet plays, the mania surrounding TimedotCom is over the top.

But really, it's much ado about nothing. Remember, TimedotCom is just a new name for Time Telecom. The Internet business hasn't yet started. The debts are still there. Nothing has changed. Except the name, of course.

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