KUALA LUMPUR: The RM450 million loan from Bank Pembangunan to Asian Broadcasting Network (M) Sdn Bhd (ABN) was the subject of heated debate in Parliament two years ago.
Deputy Finance Minister Datuk Ahmad Maslan outlined the loan agreement following repeated questioning by Pakatan Rakyat MPs led by opposition leader and Permatang Pauh MP Datuk Seri Anwar Ibrahim and Pandan MP Rafizi Ramli.
Responding during question time on July 16, 2013, Ahmad Maslan said the loan is for seven years at an interest rate of 7.8% per annum.
According to the Hansard, the loan totalled RM450 million with the equity portion being RM192 million. Cost of the project was RM642 million while the debt to equity ratio was 70:30.
“At that time only RM50 million was withdrawn; to withdraw another RM150 million, ABN has to complete cable networks of 855,000 homes,” he explained to the MPs who questioned the loan, which included Barisan Nasional’s Kinabatangan rep Datuk Bung Mokhtar Radin.
The drawdown of the full loan will only be allowed once 1,575,000 houses are wired.
ABN which was launched in mid-2013 has around 50,000 subscribers.
He said the loan was approved by the group credit committee on May 18, 2012 based on three criteria: intense credit and technical analysis by consultants Frost & Sullivan; the appointment of an independent checking engineer to verify the project costs and a RM1 billion collateral by ABN’s largest shareholder Tan Sri KK Eswaran.
Ahmad Maslan said the assets were “cash in hand, cash in the bank, quoted and unquoted shares, landed properties and other properties.”
The Edge Financial Daily on April 7 reported that ABN was facing financial problems which caused it to close its news division and studio division, taking ABN News off the air and its accompanying news portals offline. Over 60 staff were also retrenched.
Hansard records, meanwhile, show that on July 11 and 13 Finance Minister II Datuk Seri Ahmad Husni Hanadzlah was grilled over the merits of the loan, raising fears that if the venture fails, people’s money would be at risk.
“Funding another cable television project is not an infrastructure project ... it is a commercial project,” said Rafizi on July 11, adding that as a commercial project, ABN should have the competitive edge to get a loan from a commercial bank.
Anwar questioned the special treatment accorded to KK Eswaran as he was awarded a cable TV licence followed by a loan from a bank that is guaranteed by the government. “This while thousands of bumiputera entrepreneurs cannot even approach Bank Pembangunan,” he said.
Ahmad Husni reasoned that Bank Pembangunan had studied the business plan where the limit for loans to commercial entities is RM500 million and government agencies RM1.77 billion. He said the bank’s credit committee appointed Frost & Sullivan to conduct a credit and technical analysis of the business plan.
“The consultants also appointed an independent engineer; so procedures had been followed,” Ahmad Husni said, refuting allegations that the bank was forced to approve the loan following “instructions from the top”.
This article first appeared in The Edge Financial Daily, on April 13, 2015.