It is learnt that Sapura's failed attempts to strike a deal to buy into Time dotCom earlier, and the emergence of Singapore Telecommunications International Pte Ltd (STI) as a strategic partner for Time, forced Sapura to come up with its own proposal.

The question is who will eventually emerge as the new controlling shareholder in Time dotCom - Time, or the Sapura group?

The other proposal is for STI to acquire stakes in Time, Time dotCom and Time Online. After the Singapore company was identified as the sole investor on April 5, STI, Time and Renong Bhd entered into a conditional heads of agreement (HOA) to proceed with the acquisitions.

Under the HOA, the parties are given 30 days, a period expiring next week, to come up with a definitive agreement.

There could be only one winner in this battle - Sapura or Time. Both their proposals ensure that creditors will be paid in full.

Based on STI's proposal, Time will end up with a 55 per cent stake in Time dotCom and Sapura, only 2.4 per cent. STI and the public will hold 20 and 22 per cent, respectively. Time dotCom will have an enlarged capital of 2.53 million shares. STI's package is believed to amount to about RM3 billion, comprising RM1.46 billion cash and the rest, loan stocks.

Under Sapura's proposal, it will emerge as the single largest shareholder with a 40 per cent stake. Time's stake will shrink to 21 per cent, with creditors holding the remaining shares.

Sapura's RM4 billion offer comprises RM1.4 billion cash and Time dotCom shares to be used to settle debts on the ratio of one new share for every RM3 worth of debt. Time dotCom will have a paid-up capital of RM1.917 billion after the cash injection and debt-to-equity conversion.

Sapura will also provide RM400 million cash to Time dotCom as working capital prior to the latter's flotation exercise; STI is expected to use the proceeds of the initial public offer for working capital. Apart from being a Time creditor, Sapura also has a 25 per cent stake each in Time Reach Sdn Bhd and Time Wireless Sdn Bhd - units within Time dotCom.

The STI proposal will enable Time to retain absolute control over Time dotCom. Furthermore, Time dotCom has been valued at over RM8 billion, much higher than Sapura's valuation. This proposal will also see foreign money coming into the country.

However, parties close to the Sapura group argue that the higher valuation of Time dotCom will enable Time to obtain more shares, and this is detrimental to the creditors as they would receive fewer shares in the exercise.

A senior Sapura executive argues that it is better to have a lower valuation so creditors will have a real value in the shares. Creditors will also hold higher stakes in Time dotCom.

The higher valuation for Time dotCom indicates that Time does not want to lose control of the company.

Sapura is going it alone in this bid. However, the fact that Hutchison Whampoa Ltd, which is controlled by billionaire Li Ka-Shing, is not in the picture does not mean the Hong Kong company may not resurface in a separate deal.

The Sapura executive says Sapura will have a strategic partner in future to add value to the business. "At that time, it would be our strategic partner instead of a rescuer. Whatever values derived from the strategic partner will go directly into the company (Time dotCom)," he says.

The executive adds that Sapura already has its strategy in place. It has lined up credit facilities from local and foreign financial institutions, and found an international technology partner.

An agency report, quoting analysts, said Sapura has an edge in the bidding war as it is a Malaysian company with a track record in the local telco industry.

Why is Time dotCom so attractive to bidders? For one, it is a New Economy company that is moving closer to becoming a fully-grown telco player in the country.

Besides Time Reach and Time Wireless, Time dotCom also owns TT dotCom Sdn Bhd and TimeSat Sdn Bhd. TT dotCom provides fixed line telecommunications services while Time Wireless operates the ADAM PCN cellular phone service. Time Reach operates a nationwide network of payphones while TimeSat provides telecommunications facilities and services through satellite and microwave.

The Sapura executive believes there is huge potential in the traffic and voice data business. In a few years, Time dotCom's value could be three to four times higher than what it is today. That would be Sapura's payoff.

He likens the 300,000-odd customers as cashflow for Time dotCom, which will have no debt after the exercise. He adds: "After the restructuring, the company will have earnings on day one."

Not bad for Sapura, should it be successful. Several years ago before the regional economic meltdown, it sold its payphone and cellular phone operations to Time for a tidy RM1.2 billion. However, about RM400 million has yet to be settled.

Now, with an additional RM600 million, it will be able to control a fully-integrated telco including the two operations it sold.

Time said it received an initial proposal from Sapura at 5.30pm yesterday in respect of a revised restructuring scheme for its creditors.

The company has also obtained the court's approval to extend the restraining order under Section 176 (10) of the Companies Act 1965 by another 90 days from today.

The latest proposal would see the Sapura group emerging as the single largest shareholder in Time dotCom with a 40 per cent stake while Time's stake would shrink to about 20 per cent, with the rest held by creditors.

Under this proposal, it is unlikely that there will be any cash payment for Time's parent company, Renong Bhd, because the cash injection will go into Time dotCom.

Sources said the new bidder is even prepared to resort to legal action to prevent Time from proceeding with Singapore Telecom International Pte Ltd's (STI) proposed deal until Sapura's bid is considered by shareholders and creditors.

Sources claimed that Sapura's proposal is better because it is believed to be RM1 billion more than STI's offer for Time dotCom. Besides, it would include the issuance of Time dotCom shares instead of zero coupon notes.

Sapura's RM4 billion bid is believed to comprise RM1.4 billion cash and RM2.5 billion of Time dotCom shares to settle the dot.com company's debt, reported to be RM3.99 billion.

It is believed that STI had offered, in its package, about RM3 billion, involving RM1.46 billion cash and the rest possibly in loan stocks.
Time dotCom creditors can immediately realise the cash by selling their shares upon the company's listing.

Another of Sapura's proposal is to provide additional cash of some RM400 million to Time dotCom as working capital prior to the flotation exercise. STI is expected to use the proceeds from Time dotCom's initial public offer for working capital.

To prepare for the bid, sources said the Sapura group had secured a line of credit from local and foreign financial institutions.

Time dotCom, which is now undergoing a corporate restructuring scheme that will eventually see it floated on the Kuala Lumpur Stock Exchange, will buy all Time's telco assets for RM924.7 million via a share swap. On completion of the exercise, Time dotCom will own TT dotCom Sdn Bhd, TimeSat Sdn Bhd, Time Reach Sdn Bhd and Time Wireless Sdn Bhd.

On Tuesday, TheEdge.com had reported that Sapura might emerge as a new rival bidder for Time dotCom after STI signed a deal on April 5 to acquire stakes in Time, Time dotCom and Time Online.

Yesterday, Time said it had not received bids from the Sapura Group or Hong Kong's Hutchison Whampoa Ltd to buy a stake in Time.

Sapura is rushing to submit a proposal to Time ahead of the impending signing of the definitive agreement between STI, Time and Renong over the acquisition of stakes in Time and its two subsidiaries by the Singapore telecommunications giant.

On April 5, STI, Renong and Time entered into a non-binding conditional heads of agreement (HOA) to proceed with the proposed acquisitions after the Singapore company was identified as the sole investor. Under the HOA, the three parties are given 30 days, which expires next week, to come up with a definitive agreement.

It has four wholly owned subsidiaries. They are TT dotCom Sdn Bhd, Time Wireless Sdn, Time Reach Sdn Bhd and TimeSat Sdn Bhd.

TT dotCom provides fixed line telecommunications services while Time Wireless Sdn Bhd operates the ADAM PCN cellular phone service. Time Reach Sdn Bhd operates a nation-wide network of payphones and TimeSat Sdn Bhd provides telecommunications facilities and services using satellite and microwave.

An attempt to float the company was scuppered by the economic recession three years ago. The recession also took its toll on parent company Time Engineering, which saw its debt ballooned. At last count, it totaled RM4.8 billion and the company is under court protection from its creditors that runs out tomorrow, April 28.

In January, Renong and Time chief Tan Sri Halim Saad unveiled a grand plan to restructure Renong group debts that also involved the restructuring of Time and flotation of the telecommunications arm.

Earlier this month, Time announced that it had identified a strategic partner in Singapore Telecom International Ltd (STI), the telecommunications behemoth south of the border.

But for a debt-beleaguered company, Time has more suitors than it would care for. The latest is the Sapura group. Others before this include Hutchison Whampoa Ltd, which is controlled by Hong Kong billionaire Li Ka-Shing,

What do they all want?

Time dotCom.

And what does Time dotCom has?

A full suite of licenses and the physical infrastructure that puts it in the starting blocks as a fully-grown telco ready to take-off.

Time dotCom's licenses, which are valid till 2013-2018, allow it to offer voice and data services over fixed and wireless networks.

It is currently positioning itself as the alternative to incumbent Telekom Malaysia Bhd, offering full infrastructure, Internet access and support for wired commerce.

Its infrastructure includes a 3,600km land-based fibre optic network along the North South Expressway and Federal roads, a 1,600km submarine cable circling the peninsula and fibre to the curb of around 700 buildings across the country, about half of which are in the Klang Valley.

The fibre optic network is a plum asset in the rush to provide broadband capabilities in the wired Internet world.