Friday, December 10, 2010

‘Duta’ Yap joins fray for Tanjong’s gaming unit

Sourced from here.:

Gaming and property magnate Datuk Yap Yong Seong has joined the bidding for Tanjong Plc’s gaming business — valued at about RM2.5 billion — which is also being eyed by the Cheng family and businessmen aligned to the MCA.

The Malaysian Insider understands that Yap, better known as Duta Yap, has put in an attractive bid for Tanjong’s Pan Malaysia Pools Sdn Bhd, which is a numbers forecast operator (NFO) and also runs the Big Sweeps Lottery apart from the management of horse-breeding and related activities of the National Stud Farm.

“Duta Yap is in the game and his bid is pretty good,” an industry source told The Malaysian Insider.

The source also said that businessmen aligned to MCA’s Huaren Holdings Sdn Bhd are still working on a bid despite party president Datuk Seri Dr Chua Soi Lek denying The Malaysian Insider’s report on November 10, 2010.

MCA’s investment panel head Tan Sri Dr Fong Chan Onn had previously met with Tanjong officials over the deal.

“The businessmen are acting for Huaren. They want to run Pan Malaysian Pools and use the profits for Chinese education,” the source added.

An MCA leader, who requested anonymity, confirmed that there is still interest in the gaming unit. MCA previously had a stake in Multipurpose Holdings Bhd, which runs Magnum 4D Bhd, another NFO in Malaysia.

Dr Chua issued a denial that MCA was in the hunt for Pan Malaysian Pools.

Tanjong’s controlling shareholder, tycoon T. Ananda Krishnan, is expected to decide before Christmas, industry sources told The Malaysian Insider. The expected sale is part of a restructuring to be syariah-compliant and tap the Middle East and North African markets together with those in South and South-East Asia to expand the power-generation business.

Yap is the controlling shareholder for Mycom Bhd, a major property and plantation group. Mycom’s Olympia Industries Bhd had won a licence from Sabah to resume its lottery operations in October 2001.

Diriwan Corp Sdn Bhd, a unit of Olympia, received approval for the renewal from the federal Ministry of Finance but had to wait for a trading licence from the state government. Sabah stopped the operations in 1996 after Diriwan was found to have breached licensing conditions.

It is understood that a major government-owned bank is backing Yap in his bid for Pan Malaysian Pools.

MCA’s Huaren Holdings is sitting on a cash pile after it sold its 42.4 per cent stake in The Star publisher Star Publications (M) Bhd for RM1.28 billion, or RM4.09 a share, to the party in early November, giving the investment firm the funds to buy the gaming company in a combination of cash and debt financing.

The Malaysian Insider understands that MCA has been advised to bid for the gaming unit as it offers recurring revenue, similar to The Star daily.

A key player in any deal is Roberto “Bobby” Ongpin, a Marcos-era trade minister, who has built a sizeable property, telecommunications and online gaming ventures in the Philippines.

It is understood that the magnate could be a partner for the bid by either the MCA unit or the Cheng family, which is involved in the gaming slot machine business, mostly in the Klang Valley.

The family is led by patriach Datuk David Cheng, whose son, Datuk Douglas Cheng, had teamed up with Datuk Vincent Tan Ting Wong and Henry Yip to establish the popular Chinese restaurant chain Dragon-I in 2004.

Tanjong’s gaming arm, Pan Malaysian Pools Sdn Bhd, reportedly has about 24 per cent share of the local market. Tycoon Tan Sri Vincent Tan’s Berjaya Sports Toto Bhd’s market share is about 40 per cent while Magnum Corp Bhd’s holds 36 per cent.

While the NFO business is the cash cow in the gaming business stable, Tanjong has been losing money from its horse-racing operations.

According to reports, the losses from the racing operations could reach up to RM80 million in the current financial year.

The losses arise from a number of causes. It is said that the Selangor Turf Club is profitable but not those in Penang and Perak. Furthermore, the racing operations are hamstrung by annual cash payments to each of the three turf clubs.

Industry observers said the business, which has been modernised with the introduction of telephone betting, was lagging behind the illegal business which could source bets from punters through the Internet.

This has proved to be a lucrative avenue for illegal bookies who are said to make around four times what the turf clubs can pull in on any racing day.

It is learnt that the new owners of Tanjong will offer new gaming products to ensure better returns apart from asking for a reduction of government taxes.

Foreign bidders will probably not be penalised in the bidding process if they pair up with a local partner with knowledge of the industry. Multi-Purpose Holdings Bhd in a partnership with CVC Asia Pacific Ltd completed the privatisation of Magnum in 2008.