Oei offloads NATSTEEL stake, happy with deal

Investment nets him $310m in all; Ong Beng Seng's outfit now has 81% stake

By CONRAD TAN

(SINGAPORE) Oei Hong Leong, the tycoon who lost a fierce battle to take over NATSTEEL Ltd more than two years ago, has sold his entire stake in the former steelmaker for $162.6 million to its majority shareholder 98 Holdings, which is controlled by hotel magnate Ong Beng Seng.

The off-exchange transaction, completed yesterday, was at a 9.8 per cent premium to NATSTEEL's closing share price of $1.32 last Friday. At 112.124 million shares, the stake was worth $162.6 million - still less than the over $200 million that he spent building it up, by BT's own estimates.

But Mr Oei was satisfied with the sale, saying that it was a 'commercial decision' and that his decision to buy into NATSTEEL had been a 'good investment'. He estimated that he had received some $374 million in dividends from NATSTEEL since it sold its steel business to India's Tata Iron and Steel Company in August 2004, and that he no longer saw a need to hold on to the stake. The total return on his investment was some $310 million, including the dividends, he said.

Mr Oei accumulated the bulk of his NATSTEEL shares in late 2002 through his investment vehicle, Sanion Enterprises, after buying an initial 11.1 per cent stake in October that year, a week after 98 Holdings made a cash offer for the firm. 98 Holdings had emerged as one of many suitors for NATSTEEL, after an attempted management buyout led by the firm's then-president Ang Kong Hua in June 2002 prompted the firm to hire a financial adviser to seek other potential buyers.

Between early October and end-December that year, Mr Oei spent some $203 million building up a 29.79 per cent stake in NATSTEEL, according to BT estimates from public records. His share purchases forced 98 Holdings to raise its offer price four times, from the initial $1.93 a share to $2.06. 98 Holding's offer was finally accepted by other NATSTEEL shareholders in January 2003, although Mr Oei held on to his stake in the firm, remaining its second-largest shareholder after Mr Ong's 98 Holdings.

In August 2004, the firm sold its steel business to India's Tata Steel. Since then, it has focused on chemicals, engineering and construction - and more recently, waste handling and water recycling.

Then in May 2006, Mr Oei launched a takeover offer for the firm after raising his stake in it to just above the 30 per cent threshold. That bid failed, as 98 Holdings refused to sell its majority stake.

But last night, the Indonesian-born tycoon said that he and Mr Ong, a Malaysian-born hotelier, have been 'good friends' since 1972.