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I survived the 1997 economic crisis, says Tee Tuan Sem

COMPANY FOCUS, STARBIZ, MONDAY, 16TH AUGUST 2004

By: Sidek Kamiso

The year 1993 was a momentous year for Integrated Logistics Bhd (ILB). it was the time when the company got listed on the main board of Bursa Malaysia, the former Kuala Lumpur Stock Exchange.

Four years down the road, and backed with strong financial muscle, the company expanded rapidly into China.

However, no one could have predicted the 1997 currency crisis. ILB, like many other businesses at that time, saw their operations ground to a halt.

For ILB chief executive officer Tee Tuan Sem, his efforts to build business in China were reduced to almost nothing overnight. Worse still, ILB suddenly found itself with more than RM100mil in debts to worry about.

"It is a period of great pain for me," said Tee, with his palm on his chest as his eyes reddened.

Tee said it was hard to hold back tears every time he remembered that difficult period and how he helped the company recover from it.

With mounting debts at ILB, Tee faced his biggest challenge in his career.

"I went to every bank in town asking for help, but none bought my ideas," he said, adding that it was a period when banks were reluctant to extend loans to anyone, let alone a company in huge financial difficulties.

At the same time, ILB had to also readjust, from the top to bottom, shedding its staff to keep it afloat.

A drastic proposal ensued and ILB needed to bite the bullet in a "painful" restructuring process.

Tee continued to make several proposals to banks. In the early days of restructuring, most banks declined to even consider his proposal.

"I was there almost everyday with the bank officer and the risk manager" said Tee.

One of the officers said, among other things, it was Tee's persistence that made the bank throw its support for Tee's plan.

According to the officer, not many CEOs would go through that length, which Tee did, to save his company.

After getting a mandate from one bank, he then had to win support from other banks to participate in the restructuring.

"That was when I had to "sell" my company's idea and to convince them that my business model would work," he said, adding that the model included ILB's current expansion into China.

Luckily for Tee, he managed to find enough banks to agree with his financial scheme.

In February 2000, ILB announced a refinancing scheme, involving a rights issue of 51.3 million new shares, issuance of RM60mil 4% redeemable bank guaranteed bonds with detachable warrants, sale of 32.1 million warrants and an employees' share option scheme.

The bank guaranteed bonds were divided into four blocks of RM15mil each, which were fully subscribed by four banks, including the original bank which had mandated his company to start the restructuring scheme.

The scheme also included selling the company's corporate headquarters in Subang Jaya to help redeem the bank guaranteed bonds.

"I have given everything that I own to get his far; some of them were very precious and it caused me a lot of heartache to be parted from them," he said.

The restructuring of ILB, however, left its main jewel - the China operations - intact.

Looking back, Tee does not have much bitterness about the whole experience. His only concern is to see the business grow and that is enough reward for his hard work over the past few years.

"I see a lot of companies and people still affected by the 1997 economic crisis, but at least now, I can tell myself that I have not only survived but moved on," he said.