Rashid Seeks $1.1 Billion From RHB Capital Stock Sale

Rashid Hussain Bhd. plans to raise 3.88 billion ringgit ($1.1 billion) selling to shareholders its stake in RHB Capital Bhd., Malaysia's fourth-largest bank, to wipe out debt.

Rashid Hussain will offer investors as many as 66 RHB Capital shares for every 100 Rashid Hussain shares, the company said in a statement today. It offered 3.30 ringgit for each RHB Capital share, less than the stock's closing price yesterday of 4.54 ringgit.

Rashid Hussain, which needs to raise funds before debt matures in June, is the subject of competing takeover bids from EON Capital Bhd. and Kuwait Finance House. The Kuala Lumpur-based company, which lost money in the second and third quarters of last year, had 2.36 billion ringgit of external borrowings at the end of 2006 and a loan to RHB Capital of 1.24 billion ringgit.

``The deal is probably backed by Kuwait Finance which will give an incentive for Rashid Hussain'' to choose its bid over EON Capital, said Chan Chee Kin, an analyst at TA Research Sdn. ``Chances for EON are slimmer,'' he said.

Salman Younis, head of Kuwait Finance's Malaysian unit, was unable to talk when reached on his mobile phone today. Loga Rajan, an EON Capital spokesman, said the bank's directors were in a meeting and may make a statement today. Utama Chairman Nik Hashim Nik Yusoff was unavailable, his secretary said.

Buyout Plan

Kuwait Finance, the Persian Gulf's biggest Islamic investment bank, last week bid 2.16 billion ringgit for Utama Banking Group Bhd.'s 33 percent stake in Rashid Hussain under a plan to buy out the group. EON, whose investors include Malaysian tycoon Syed Mokhtar Al-Bukhary, made offers for RHB Capital and its parent Rashid, which may cost as much as 6.33 billion ringgit, based on Bloomberg calculations.

``Definitely, it's a good thing, it will resolve Rashid Hussain's debts,'' said Chan Ken Yew, an analyst at OSK Research Sdn. in Kuala Lumpur. ``RHB Capital shareholders have nothing to lose.''

Rashid Hussain and RHB Capital shares were suspended in Kuala Lumpur today.

Rashid Hussain said after the sale of the company's stake in RHB Capital, and the repayment of the loan, RHB Capital will have additional cash of 1.2 billion ringgit.

The move would leave Rashid Hussain without its biggest asset, and the company may sell other holdings after the transaction, it said. Rashid Hussain's ``ultimate intention'' is to liquidate the company and end its listing on the Malaysian stock exchange, it said.

source:www.bloomberg.com