Dramatic twist to the SilTerra Malaysia Sdn Bhd sale saga?

KUALA LUMPUR: There is a dramatic twist to the SilTerra Malaysia Sdn Bhd sale saga.

Khazanah Nasional Bhd, sources said, had decided against selling its blue-chip wafer fabrication company outright to foreign investors.

Only local bidders with their strategic partner would be considered for the takeover of Kulim-based SilTerra, they added.

Khazanah’s board, which includes the prime minister and finance minister, is due to meet in mid-January on possibly making the final decision on the winning bidder.

“The board could also decide to delay the decision on the winning bidder till mid-2021 to allow for more time for bidders to finalise funding,” a source told the New Straits Times.

The NST previously reported that Khazanah had received four bids for SilTerra including from Taiwan’s Foxconn and Germany’s X-FAB Silicon Foundries before the earlier deadline for submission on July 31 last year.

The other two were Malaysian listed firms Dagang Nexchange Bhd (DNeX) and Green Packet Bhd.

Both were backed by different China-based private equity firms, but with DNeX and Green Packet maintaining majority stake in their respective consortiums.

It was also reported that Khazanah had extended the takeover tender for the world-class but loss-making semiconductor firm to October 9 last year from July 31 originally, as it made some changes to the terms and conditions of the tender.

The sources said Khazanah now had requested Green Packet and DNeX to submit their updated bids by December 28 last year.

Its main concerns were related to credibility of consortiums, proof of funding, certainty of quick closing of the deal, quality of business turnaround, impact of ecosystem development, introduction of specific technology and execution track record, they added.

It is learnt that DNeX did not want a further delay in Khazanah’s decision-making as it had finalised funding and was ready to execute its turnaround plan for SilTerra.

The sources said such delay seemed imminent as DNeX and Green Packet were bidding with partners from China, Khazanah wanted proof that their respective partners had the approval from the Chinese government to take the money out to pay for the investment.

The proposal from DNeX and its strategic partner Beijing CGP Investment Co Ltd (Beijing CGP) was focused on planning and executing SilTerra’s turnaround with a total investment that could reach nearly RM1 billion over the short to medium haul.

On top of a RM136 million cash payment for Khazanah, DNex and its partner would reportedly absorb SilTerra’s RM210 million bank borrowings, and inject a total of RM500 million for its capital and operating expenditures.

Green Packet, in a 55:45 consortium with Dongfang Huijia Zhuhai Asset Management Co Ltd, had put in a bid comprising RM235 million cash payment and RM210 million debt absorption.

Khazanah began another sales process early last year using KPMG, after previous attempts at hiving off Silterra had failed.

The government investment arm has sunk more than RM2 billion into Kulim-based Silterra, which has posted accumulated losses of more than RM8 billion since its formation in 1995.

Silterra was created in 1995 and built by 2000 to nudge Malaysia higher up the semiconductor value chain from merely being an assembler of chips.

However, its business struggled from day one for a variety of reasons and saw numerous changes in chief executive officer.

Silterra reportedly posted a loss of RM172 million for its financial year ended December 31 2019.

Source: NST