Tuesday, June 26, 2007

Cooking And More Cooking!!

Two articles posted on The Edge Weekly on TransMile and Megan.

Quote: In a nutshell, it was a well-designed scheme running for years involving some customers and suppliers and the company's top management.
  1. "If everyone writes off their loans completely, the banks will still stand but there will be a substantial impact on earnings. It's a problem," says a bank executive last week
  2. "It's like a house of cards. All you need is for one bank to pull the credit line and the whole company will collapse," he says.
  3. Megan Media seems to worry the lenders more. As at January, its borrowings total RM888 million, of which RM320 million is in the form of Islamic bonds that have defaulted. Megan's principal bankers are Citibank, CIMB, DBS, HSBC, Malayan Banking and RHB. "
  4. Each bank's exposure to Megan ranges from as low as RM10 million to RM250 million. So the size of the hit will vary," says the bank executive.
  5. "For now, it's generally agreed among the creditors that there's no point pulling back credit lines or calling for the company to be liquidated. But some are wary of Citibank because its head office may decide to pull the plug," notes the bank executive.