KUALA LUMPUR, Oct 11 — Opposition lawmaker Fahmi Fadzil has urged the federal government to reconsider the proposed merger between UEM Sunrise and Eco World, in light of the current economic downturn brought on by the Covid-19 pandemic.
The Lembah Pantai MP said the proposed merger would be viewed negatively whereby it could be seen as an attempt to bail out a private company using public funds.
UEM Sunrise is the flagship property arm of UEM Group Berhad and sovereign wealth fund Khazanah Nasional Berhad.
Khazanah fully owns the UEM Group.
“In light of the current economic situation which has yet to recover and 745,000 job losses as of July 2020, the government through Khazanah Nasional need not rush and should reconsider the viability of the merger.
“The government must work harder to save the rakyat, not private companies,” he said in a statement on Facebook.
He cited how shares of EcoWorld have dropped to RM0.39 as compared to RM1.40 five years ago, before further expressing his concerns over the company’s cash flow and debt.
“If this continues, it is impossible for Khazanah to be seen as a ‘saviour’ to EcoWorld when they are forced to inject large amounts of funds, while we are reminded that the real estate market for the upcoming years is set to be weakened,” he said.
Moreover, Fahmi said the reduction of Khazanah Nasional’s stake in UEM Sunrise from 66 per cent to 43 per cent should the merger take place would be a loss to the rakyat.
EcoWorld said in a filing to Bursa Malaysia that it received the proposal from UEM Group, UEM Sunrise’s main shareholder, last Monday.
But the proposition has become the epicentre of yet another controversy involving state-linked firms under Perikatan Nasional rule, as opponents are reading it as an attempt to bail out a beleaguered company.
Khazanah Nasional holds a controlling stake in UEM Sunrise via UEM Group, at 66 per cent.
The proposed merger will be carried out through share and warrant swap. Upon completion, UEM Group will remain the single largest shareholder of the merged entity with 43 per cent.
UEM Group said the consolidation exercise would harness the strengths and capabilities of UEM Sunrise and EcoWorld, as subdued macro-economic conditions made worse by the outbreak are forcing property players to pool resources to survive.