Is there no end to the corporate wranglings of Malaysia Inc? Recent events at Rashid Hussain Berhad (RHB) suggest not.

In a hastily-arranged press conference, RHB’s executive chairman, Tan Sri Rashid Hussain, yesterday said he was “perplexed” by one of his major shareholder’s decision to oppose his restructuring plan.

The major shareholder, Malaysian Resources Corporation Berhad (MRCB), has objected to a M$630 million ($165.79 million) equity issue. The equity was to be raised to pay for the restructuring of RHB’s banking and investment banking assets which are to be separated into two holding companies. This is to comply with Malaysia’s new ‘Glass-Steagall’ regulations. Plus, in order to become a universal broker, RHB will have to buy two other brokers. These acquisitions and the restructuring require fresh capital.

However, MRCB, which owns 22.69% of RHB Berhad, objected to this plan. That’s because it would require the company to either put up cash or see its shareholding diluted. So the plan was cancelled and RHB announced that RHB Capital – of which RHB Berhad owns 55% - will do a M$650 million bond issue instead. This has been underwritten by HSBC.

MRCB has opposed this too, but thanks to the bond being issued at the RHB Capital level, it has no power to block the move.

So what’s going on and why is Tan Sri Rashid “perplexed”?

This story gets to the heart of one of the great tussles of Malaysia Inc. Prior to the Asian crisis, Tan Sri Rashid Hussain was one of the poster boys of Malaysian capitalism. A well-connected Bumiputra, he appeared to be able to do no wrong. As such, he grew his successful brokerage into a fully-fledged banking group.

In 1997, he was given the go ahead to enter the banking big leagues when he merged Kwong Yik Bank with DCB Bank to create RHB Bank, which became Malaysia’s third largest bank. As proof of the deals’ blessing, 27% of the new enlarged group was bought by MRCB.

At this time, MRCB was viewed as a proxy company for then deputy leader, Anwar Ibrahim. With Anwar’s imprisonment, being close to the leader or having him as a shareholder was no longer a positive thing. Tan Sri Rashid’s position became undermined as new Finance Minister Daim Zainuddin came back into the limelight.

Daim began to dismantle Anwar’s economic sphere as he reasserted his influence over Malaysia Inc. There was thus a changing of the guard at MRCB, which saw Khalid Ahmad replaced as executive chairman by Abdul Rahman, who bought his stake. Khalid was a close associate of Anwar, while the new man is regarded as closer to the Daim camp.

Then last year, Tan Sri Rashid looked set to lose his bank when the government proposed that Malaysia should have six anchor banks and RHB wouldn’t be one of them. Only a last minute reprieve from Prime Minister Mahathir thwarted this Daim-driven plan.

This latest move is part of the ongoing saga. MRCB's behaviour is a seen as a further move to destabilize Tan Sri Rashid’s plans to rejuvenate his group. Taking on debt instead of equity is hardly ideal.

But what does MRCB have to gain from its very public denunciation of the plan? This is the hardest thing to fathom. The most likely possibility is that MRCB wants out of its 22% stake in RHB Berhad and that it wants Tan Sri Rashid to find a buyer for its stake.

MRCB is focusing its interests on its core activity of media – it owns the New Straits Times as well as TV3. However, it bought into RHB at M$15 just before the crisis and the stock is currently trading at M$1.80.

So it is difficult to see how MRCB can get out of its investment without a haircut. Maybe it will continue to create a noise until Tan Sri Rashid comes up with a solution to this conundrum.