IJN: Is there really a threat of takeover?

Bigdogdotcom leaked the story of a possible privatisation of Instituit Jantung Negara (IJN) last Tuesday October 20th, 2009. His argument was based on a proposal believe to undertake a "Wide Unbundling of Asset" (WAU) similar to the excercise undertaken by Malaysian Airlines System. WAU was the term used by the Binafikir team to justify millions to be paid to them.

It is actually a financing scheme one can find in any undergraduate corporate finance textbook called sell and leaseback. It is an option to help a company realise some cash in a liquidity crunch situation. Although quite common and almost a textbook case, it is not known to the man on the street.

However, this led Bigdogdotcom to suspect that there is a plan to fragmentise and decentralise IJN as a prequel to a takeover. In previous postings on IJN, this blog did mention that IJN is flush with cash, despite the spending for the new wing. Why the scheme when it s flush with cash? The fact that IJN is flush with cash makes it gorgeous for a takeover.

The suspicion of another takeover has been lingering since the last failed attempt by Sime Darby. Many quarters had interpreted the then Deputy Prime Minister, Dato Seri Najib's statement as no takeover for now. The question in the back of most in the know ever since is how the takeover will happen? And who?

In the meanwhile, I am still trying to understand if there is such a takeover plan now in the first palce.

Big Dog's notion of fragmentation and decentralisation builds up further from a Ernst & Young study commssioned this year to restructure the Company.

In the new structure, Bigdog's source revealed that current Medical Director and IJN Holdings Board member, Cardiologist Dato’ Seri Dr. Robaayah Zambahari will be CEO taking charge of subsidiary on hospital operations, the original IJN Sdn Bhd.

The existing Group Managing Director remains CEO at IJN Holding.

Although the structure existed in the EW report, news reports yesterday denying the privatisation plan issued by Tan Sri Nor Mohamad Yakcop's office and IJN Holdings Berhad mentioned that the structure had been in placed since 2005. The denial reports below:

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IJN Holdings Has No Plan To Privatise IJN

Bernama.com, October 22, 2009

KUALA LUMPUR — IJN Holdings Sdn Bhd has no intention to privatise the Institut Jantung Negara (IJN) or any section of the nation’s premier heart centre.

It denied that any submission to do so has been sent to the Economic Planning Unit (EPU) in the Prime Minister’s Department.

IJN Holdings, in a statement today, said the IJN Group remains committed to deliver the best cardiac care for the people n line with its corporatisation objectives.

The IJN Group consists of IJN Holdings as the holding company and has four subsidiaries. They are IJN Sdn Bhd, IJN Capital, IJN College and IJN International.

IJN Holdings, wholly-owned by MOF Inc, was incorporated in March 2005 as part of a corporate restructuring exercise approved by its board and the government to facilitate fund-raising for redevelopment of the National Heart Centre’s facilities and its expansion into education and training.

It said the exercise had also consolidated IJN’s key activities to create better focus in its areas of expertise.

“The 2005 restructuring was to support the IJN in achieving its vision of becoming a global centre of excellence in cardiovascular and acrdiothoraic care and ensuring the heart centre as an institution remain sustainable in facing future challenges,” it added.

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Kerajaan sahkan Institiut Jantung Negara tidak akan diswastakan

mSTar, Khamis Oktober 22, 2009

KUALA LUMPUR: Kerajaan hari ini mengumumkan bahawa ia tidak akan menswastakan Institut Jantung Negara (IJN) sama ada secara keseluruhannya mahupun sebahagian.

Perkara ini dijelaskan oleh Menteri di Jabatan Perdana Menteri, Tan Sri Nor Mohamed Yakcop ketika dihubungi BERNAMA hari ini.

Beliau telah diminta menjelaskan isu ini ekoran tersebarnya khabar angin terbaru kononnya IJN untuk kali yang kedua menjadi subjek kepada pengambilalihan secara penswastaan.

Sebelum ini cadangan Sime Darby untuk membeli kepentingan dalam IJN telah mendapat bantahan majoriti rakyat sehingga pelan itu gagal direalisasikan.

“Unit Perancangan Ekonomi (EPU) belum memberi sebarang kelulusan bagi penswastaan IJN,” katanya semasa dihubungi Bernama.

“Tiada apa (kelulusan) telah dihantar kepada kami. Malah, walau sesiapa pun datang menemui kami mengenai perkara itu, tiada apa yang akan diswastakan, tidak secara sebahagian atau secara keseluruhan,” kata beliau lagi.

Menurut laporan beberapa laman blog, Lembaga Pengarah IJN telah dibenarkan untuk melakukan skim merungkaikan aset secara meluas, yang merupakan satu langkah yang pada akhirnya memisahkan fungsi operasi institut itu dan mewujudkan anak syarikat baharu.

IJN kini beroperasi di dalam bentuk IJN Holdings Sdn Bhd yang memiliki Hospital IJN. Terdapat juga IJN Capital dan IJN College di bawah pengurusan sedia ada sekarang.

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As said above, the IJN Holding structure was established with consensual agreement involving all the shareholders and stakeholders, and with collective responsibility agreement at the Board level in which it is represented by the shareholders, authorities and both medical and adminsitrative side of the organisation.

With the denials by IJN Holdings and Tan Sri Nor Yakcop, my question will be similar to Bigdogdotcom - If there are no monkeys, how come the tree is shaking?

Bigdogdotcom question is why was the EY study made? That should not be difficult to figure out.

A Voice is more curious as to how this sudden talk of another takeover come about? With Najib going around with his 1Malaysia: Rakyat didahulukan, Pencapaian diutamakan, the privatisation or takeover of IJN will run counter to what he is preaching.

Najib would not do such a blunder. Pak Lah could but not Najib.

Could it be a case of a tuff war between management and the medical doctors?

Bigdogdotcom wrote quite a bit about doctors and their contributions. Naturally most doctors would prefer that one of them lead IJN instead of a non doctor. It is true, but I do not think there is a tuft war.

I'll tell you why later in my next posting because I've got to run for an appointment with my doctor.

Of more important than trying to figure out who did it, which is of no consequence since there is no privatisation happening, let us ponder to find a way so that IJN would permanently remain as an integral part of the public healthcare system, specifically on heart care.

The motto for IJN should remain as 1IJN: Pesakit diutamakan, Pemulihan didahulukan. Both management and medical believe in the same thing, so no tuft war.

To answer the title, is there really a threat of a takeover, my answer is also no.

The management side, who survive on salary can't afford to do an MBO of IJN, without backing of a corporate shark. The doctors, though better renumerated than management, do not have the ability to do an MBO unless advised and backing by a corporate shark.

The last thing each side would want is to be associated with a corporate shark. They will gobble them back.

No other corporation would dare do a Sime Darby as it will invite a public outcry. I strongly believe that Government will stay true to the original purposes - stated and unstated - in establishing IJN.

So it is really a case of which monkey doing the shaking and why do the shaking?