Published May 29, 2009

Chartered soars on talk of $2.45 billion bid

Abu Dhabi outfit said to have made offer to Temasek

By JAMIE LEE

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(SINGAPORE) Shares of Chartered Semiconductor Manufacturing jumped as much as 9.36 per cent yesterday on talk that a takeover offer from a Middle East values it around $2.45 billion.

ATIC, set up last year, is a technology investment company owned by the Abu Dhabi government. It aims to own a 'diverse local and international portfolio of highly profitable investments in the advanced technology sector'.

BT understands the chip-maker has received a bid from Advanced Technology Investment Company (ATIC) to buy Temasek Holdings's near-60 per cent stake at between $2.40 and $2.60 a share.

The $2.45 billion price tag represents a 19 per cent premium to Chartered's market cap yesterday of $2.05 billion.

The stock surged to as high as $2.22 during the day before ending 7.39 per cent up at $2.18.

Temasek has declined to comment on the takeover talk.

ATIC, which was set up last year, is a technology investment company owned by the Abu Dhabi government.

It aims to own a 'diverse local and international portfolio of highly profitable investments in the advanced technology sector,' according to its website.

ATIC's connection with Singapore is not entirely new.

Globalfoundries - a joint venture between ATIC and Advanced Micro Devices - considered Singapore as the base for a US$4.2 billion wafer fab plant but eventually decided on New York, its chief executive Doug Grose told BT in March this year.

Singapore lost out to New York because the latter offered a stronger talent pool and financial incentives, despite lower labour costs here, Mr Grose said at the time.

But Globalfoundries - which will compete with Chartered and the other chip-makers - was considering setting up a sales, engineering and marketing unit in Singapore, he said. Other possible destinations include China and Japan.

A source told BT in early January that Temasek had held preliminary talks with suitors for Chartered but that poor market conditions dampened the possibility of a sale at an attractive price. There were also concerns over potential job cuts at that point, the source added.

At the end of January, Chartered said it would fire 600 workers worldwide, including 540 here. This represented 8 per cent of its total work force.

Amid worries over its debt, it also raised US$300 million from a rights issue announced in March.

Temasek backed the rights issue by subscribing to its pro-rata entitlement, as well as agreeing to buy up to 90 per cent of the offering if the rights shares were not subscribed. This included its undertaking to Chartered and the underwriters for its pro-rata entitlement.

Analysts have touted Chartered as a takeover target because of its appetising valuation. Its price-to-book value is just 0.43 times.

Chartered has said recent signs point to the industry having bottomed. The company reported a first-quarter net loss of US$98.8 million, reversing a US$2.4 million profit a year earlier. Revenue sank 37.2 per cent to US$243.9 million, from US$388.2 million a year earlier.

Published May 29, 2009

Temasek's 6-year report card shows $56b gain

This is in spite of last year's setback that wiped out half the gains of 5 preceding years in just 8 months

By TEH SHI NING

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(SINGAPORE) Temasek Holdings's portfolio grew $56 billion since March 2003 - as its $58 billion loss last year came after 'a much greater gain' of $114 billion in the five preceding years.

Related article: Click here for Mr Tharman's speech

Providing these figures in Parliament yesterday, Finance Minister Tharman Shanmugaratnam said that Temasek has 'performed respectably', and that 'the only reasonable way' to evaluate its performance was to see 'how the losses and gains add up, and how its overall portfolio performs over time'.

Responding to MPs' questions on Temasek's recent loss-making divestment of Bank of America (BoA) shares, Mr Tharman also said that its early exit does not detract from its position as a long-term investor.

Temasek's investment in Merrill Lynch since December 2007 was converted into BoA shares when Merrill was bought over by BOA in January this year. News then broke last Tuesday that Temasek had sold all of its 3.8 per cent stake in the US bank - at an estimated loss of around US$3 billion.

A week later, Temasek issued a statement explaining that their 'investment thesis had changed from Merrill's specific businesses to the more diversified BoA linkage to the broader US economy' and that 'the risk-return environment had changed substantially', hence, the divestment. Reiterating Temasek's rationale yesterday, Mr Tharman said that a long-term investment orientation 'does not mean being locked into every individual investment, regardless of major changes in the environment or a new investment proposition'.

He acknowledged the premise behind MPs' comments this week - that 'Temasek has been on a losing path, and Singapore is poorer for it'. But he disagreed, saying, 'This is simply not the case.'

'Temasek has in fact made large investment gains over the course of the market cycle that began in 2003, including the boom that lasted till 2007 as well as the subsequent bust,' he said.

Mr Tharman also pointed out that a 'large part' of the $58 billion, 31 per cent of Temasek's portfolio value, lost from end March to November last year, was due to declining values of its local investments. Thirty-two billion dollars was lost due to the drop in market value of the 10 largest listed Temasek-linked companies here. Share prices of these TLCs fell 41 per cent on average over the period, in line with the movement of the Singapore market as a whole, Mr Tharman said.

Temasek's financial accounts for the year ended end-March 2009 have not been audited yet, but Mr Tharman said that its position as of last November already 'takes in all unrealised losses including the mark-to-market losses on the Merrill investment'.

'What matters however is not how Temasek did in this last year, when the markets were in collapse, but how it has done over the cycle as a whole.'

And over the six-year cycle, Temasek out-performed relevant market indices, Mr Tharman said, comparing its annualised shareholder returns of 15 per cent in US dollar terms to the MSCI World Index's 6 per cent annualised gain.

Its returns were higher than that of a weighted index of global, Asian and Singapore equity market indices, as well what 'several other well-regarded investors have earned over the cycle', Mr Tharman added.

But, it is 'not realistic to expect it to outperform every cycle', nor is it realistic to expect it to 'avoid losses on every individual investment or losses on its overall portfolio when the markets go through sharp correction,' he said.

Mr Tharman assured MP Inderjit Singh, that the three agencies holding and investing the government's assets - Temasek, GIC and MAS - are 'not being left to run on autopilot'. While the government will not be 'peering over each and every investment decision' he said, it does survey government assets as a whole, to ensure that there is no undue concentration of risks.

In reply to a question from Non-Constituency MP Sylvia Lim, Mr Tharman said that while he is not aware of whether Temasek voted for or against BoA's acquisition of Merrill at the shareholders' meeting last December, he does not think the vote is indicative of whether they intended to hold on to BoA shares.

Ms Lim also asked why the sell-off of Temasek's stake had not been staggered, a move which could have tempered losses. To which Mr Tharman repeated that it was better to consider the overall performance of the portfolio long-term, instead of looking, in retrospect, at timing profits from a single deal.

Published May 28, 2009

Tanjung Offshore bids for 30 projects in 2009

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(KUALA LUMPUR) Tanjung Offshore Bhd, an integrated oil and gas service provider, has bid for some 30 projects this year, says a report in Malaysia's Business Times, quoting its managing director Omar Khalid. 'Almost 70 per cent of our bids are domestic projects and the remaining 30 per cent are abroad, including in India and Australia,' Mr Omar told reporters after the company's annual general meeting in Ampang, Selangor on Tuesday.

Tanjung Offshore has an order book worth RM1.5 billion (S$621 million) that should keep it busy until 2012. Nevertheless, the company is racing to expand abroad, especially in India, Indonesia, Thailand and the Middle East, in a bid to transform itself into a regional force.

Mr Omar said Tanjung Offshore has started making inroads into Thailand, providing well-testing services in the Gulf of Thailand, and is scouting elsewhere for more jobs. 'We have been approached directly to bid for a tender in India . . . and also been approached by several investors in the Middle East to form a partnership and joint venture in the region,' said Mr Omar.

With this in mind, Tanjung Offshore has allocated some RM250 million to expand its fleet size, with construction of five new vessels, due to be delivered between the next six and 10 months. For 2008, Tanjung Offshore registered revenue of RM574.3 million against RM422.9 million for 2007, while its net profit rose to RM31.5 million last year from RM23.2 million in the previous year.