KUALA LUMPUR, Nov 26 — The proposed merger between Khazanah Nasional Berhad-linked UEM Sunrise Berhad and listed private company EcoWorld Development Group Berhad (EcoWorld) is still in the early stages of discussions, the Finance Ministry has said.

The ministry said it was Khazanah Nasional Berhad’s fully-owned company UEM Group Berhad that had proposed the merger for the consideration of the board of directors of both property development companies.

“The proposal was presented based on the commercial benefits that will be able to be generated as a result of the merger.

“The proposed merger does not involve cash, but the transaction of exchange in shares and warrants that could further strengthen UEM Sunrise’s position,” it said in a written parliamentary reply yesterday.

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But the ministry went on to indicate that such a proposal had yet to be decided on.

“This proposal for merger is still in the preliminary stages of discussion and is subject to the carrying out of due diligence and the agreement of all shareholders of UEM Sunrise and EcoWorld, if both these companies agree to start further merger talks.

“Any decision relating to this merger proposal is commercial in nature and is the responsibility of the companies involved to ensure this merger produces the best synergy by taking into account the interests of the shareholders of the respective companies,” the ministry concluded.

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The ministry was responding to questions from two MPs in the Dewan Rakyat.

DAP’s Damansara MP Tony Pua had asked the finance minister to state the benefits that would be enjoyed by Khazanah subsidiary UEM Sunrise when merged with EcoWorld which was said to have almost RM3 billion in debts, and whether Khazanah would make additional investment in the proposed merged company UEM Sunrise-EcoWorld.

PKR’s Balik Pulau MP Muhammad Bakhtiar Wan Chik meanwhile had asked the finance minister to state the rationale and purpose of merging EcoWorld and UEM Sunrise when Eco World’s debts would become a liability to Khazanah and if this was a “bail out” to purportedly save a “crony”.

On October 5, Khazanah Nasional’s fully-owned unit UEM Group Bhd proposed the merger between UEM Sunrise — where it owns a 66.1 per cent stake — and EcoWorld, with the intention of pooling the two companies’ resources and capabilities to strengthen their performance and long-term sustainability.

The merger idea was reportedly proposed to create one of the largest property developers in Malaysia which would have a projected gross development value of RM173.2 billion and a landbank totalling over 6,880 hectares locally.

Amid controversy over the proposed merger, UEM Sunrise Berhad managing director and chief executive Anwar Syahrin Abdul Ajib and its board member Subimal Sen Gupta Sen were announced to have resigned just days after the October 5 announcement.

On October 30, EcoWorld’s board in a company announcement on Bursa Malaysia referred to the October 5 invitation by UEM Group Berhad to consider the proposer merger with UEM Sunrise, and went on to say that it had written to UEM Group Berhad to “request for more time” for EcoWorld’s board to consider the proposed merger.

“The board has requested until January 2, 2021 to respond with a decision to UEM Group Berhad to coincide with the date requested by UEM Sunrise Berhad,” EcoWorld had said in the company announcement, adding that it would make further announcements on any material development in due course.