Utusan's huge debt turns off potential investors, on verge of ceasing ops

-A +A

KUALA LUMPUR (Aug 19): Financially-stressed Utusan Melayu (M) Bhd is facing an uphill task of finding a white knight to salvage the newspaper group, which has total debts of RM139.19 million as at June 30.  

In its quarterly financial results announcement to Bursa Malaysia, Utusan said it is “impossible for the group to convince potential investors to revive the business” as “a few potential identified parties has declined to participate, due to [the] group’s huge liabilities”.

Utusan, which has not paid its employees since June, said it has not been able to resolve its cashflow issues immediately, as the slow market sentiment, restriction, and requirement by relevant authorities, have impeded its efforts of disposing of properties to raise cash.

In view of the financial stress, its board is of the view that it is now unable to meet the requirement of the regularisation plan, after being classified as PN17 on Aug 20, 2018. 

In other words, the newspaper group, which once was controlled by UMNO, is on the brink of being delisted from the stock exchange. Moreover, there are news reports that the group would cease publication of all its newspapers coming Wednesday. However, there is no official announcement at the time of writing. 

UMNO trimmed its stake in Utusan in February, selling off a 30% equity interest. The opposition party currently holds an 18.16% stake.  

Utusan, which publishes Utusan Malaysia, Mingguan Malaysia, Kosmo And Kosmo Ahad — has turned in a seventh consecutive quarterly net loss at RM3.89 million for the three-month period ended June 30, 2019 (2QFY19).

Its quarterly revenue had more than halved to RM25.91 million, from RM63.87 million in the year-ago quarter.

As costs continue to creep up, Utusan recorded a cumulative net loss of RM12.09 million for the first half of this year. Cumulative revenue plunged 56% to RM52.66 million, compared with RM119.38 million in the same period a year ago.

About 100 staff and former staff from Utusan Malaysia today staged a picket outside the Malay daily’s headquarters, demanding an immediate settlement of salaries and severance instalments owed for the last three months.

The Malaysian Trades Union Congress secretary-general J Solomon lambasted UMNO politicians who have allegedly ignored the plight of Utusan Malaysia's staff, despite having benefited from the Malay daily's coverage since its inception.

Umno's former Kulim-Bandar Baharu MP Abd Aziz Sheikh Feadzir’s investment vehicle Opulence Asia Sdn Bhd bought the 30% stake from UMNO, making him the largest shareholder currently. 

Another substantial shareholder is Tan Sri Syed Mokhtar Albukhary, who owns a 19.72% stake in Utusan.

Syed Mokhtar has been in the spotlight of late, after continuously raising his shareholding in Media Prima Bhd. The tycoon, who owns the publisher of The Malaysian Reserve, emerged as Media Prima’s largest shareholder with a 19.5% stake last month.

Read also:
NUJ: Reported closure of Utusan on Wednesday not official