KUALA LUMPUR, Nov 14 — Umno plans to avoid paying the interest cost in its bid to bail out its ailing daily Utusan Malaysia, a DAP lawmaker claimed today in a move that could reflect poorly on Malaysia’s stock exchange and market regulation.
Kulai MP Teo Nie Ching 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 a mandatory take-over offer (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 yeterday.
“Umno is seeking an exemption so that it can support Utusan’s bid to raise funds without further incurring interest costs.
“However, the sustainability of Utusan should not be at the expense of taxpayers money of minority shareholders’ interest,” she told reporters at the Parliament lobby here.
Umno currently holds more than 55 million of Utusan shares, representing a 49.8 per cent of the voting shares.
Based on the indicative First Call of RM0.68, Umno may hold up to approximately 53.1 per cent to 67.2 per cent of the voting shares in the company upon completion of the proposed two-call rights issue.
“This represents an increase of more than two per cent of the voting shares and there is no reason why Umno should be exempted from the obligation to undertake a MO,” Teo commented on the matter.
According to the Kulai MP, the total borrowings of the Utusan group amounts to approximately RM195 million.
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.
He said the top 35 GLCs only spend 3.7 per cent of their combined advertising budget on Utusan.
The move was met with fierce criticism and opposition accusation that the Barisan Nasional (BN) government was trying to bail Utusan out.
Teo appealed to the SC against granting Umno exemption from the MO, arguing that it will be detrimental to minority shareholder rights and tell the financial community that “special preferences continues to exist for Umno and their cronies”.
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.
