KUALA LUMPUR, Nov 15 — The Securities Commission (SC) must act fairly in scrutinising Umno's bid to bail out its loss-making daily Utusan Malaysia to protect the financial market's integrity, DAP MP Tony Pua said today.

According to the Petaling Jaya Utara lawmaker, the SC must not exempt the powerful Malay party from fulfilling mandatory requirements over the take-over offer (MO) despite any interference that might arise from the Ministry of Finance.

“The Securities Commission must act independently without undue interference from the Finance Ministry to exempt Umno from conducting a mandatory general offer to buy out minority shareholders of Utusan Melayu Bhd,” Pua said in a statement here.

According to Pua, if Umno's stake in the company exceeds an additional 2 percentage points, it must offer the MO to buyout other shareholders in the company.

Umno currently holds more than 55 million of Utusan shares, representing a 49.8 per cent of the voting shares, and will likely increase its stake between approximately 53.1 per cent to 67.2 per cent.

“Therefore, it is all the more important for Securities Commission to protect the integrity of our financial markets.  It must not only act fairly, but also be seen to act fairly to all investors and Malaysians,” Pua added.

Yesterday, Kulai MP Teo Nie Ching claimed that Umno plans to avoid paying the interest cost in its bailout, a move she said could reflect poorly on Malaysia’s stock exchange and market regulation.

Teo claimed Utusan’s announcement filed at the Bursa Malaysia on November 12 revealed Umno’s plan to take up the paper’s two-call rights issue of 110,733,837 Rights Shares, which would make it compulsory for the party to undertake the MO and pay interest.

Umno, however, is seeking an exemption from the MO from the Securities Commission, Teo said, citing from the newspaper’s filing to the Malaysian bourse on Wednesday.

Pua alleged today that the bailout attempt, in addition to Putrajaya's call for government-linked companies (GLCs) to advertise more in the daily, is prove that Utusan is in “dire financial straits”.

“The company is now laden with RM195 million in debt as at October 2013, made losses of RM15.8 million for the financial year 2012.  The losses continue to rise as in the first quarter of this year alone, the losses have amounted to RM8.8 million,” he explained.

Another opposition lawmaker claimed its debt now stands at RM20 million as the paper saw its circulation dropped drastically, from 350,000 to 178,000 a day by December last year.

The loss has amounted to RM8.8 million with its circulation believed to be dwindling further. The paper is also dealing with several pending lawsuits and have lost many for the past five years.

What recently followed was news reports of Deputy Finance Minister Datuk Ahmad Maslan “ordering” GLCs to spend more money to support Utusan, and another Malay daily Berita Harian, in their “struggle” for the country.

The move was met with fierce criticism and opposition accusation that the Barisan Nasional (BN) government was trying to bail Utusan out.

It has been reported that sales for Malay-language papers like Utusan, Berita Harian and the English-language New Straits Times, which are all either directly or indirectly linked to Umno and the ruling BN coalition, have suffered a decline of up to 20 per cent in daily circulation between 2005 and 2009.

Utusan has over the years been accused of being racist and taking a hardline position on issues that are seen to challenge Malay rights and privileges.

It has suffered for its heavily pro-Malay stance, losing several legal suits filed mostly by opposition Pakatan Rakyat politicians in recent years over various defamatory articles.