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KUALA LUMPUR, October 11 – Opposition lawmaker Fahmi Fadzil urged the federal government to reconsider the proposed merger between UEM Sunrise and Eco World, in light of the current economic recession triggered by the Covid-19 pandemic.
The Lembah Pantai deputy said the proposed merger would be viewed negatively, so it could be seen as an attempt to bail out a private company using public funds.
UEM Sunrise is the flagship ownership arm of UEM Group Berhad and the Khazanah Nasional Berhad sovereign wealth fund.
Khazanah is the full owner of the UEM Group.
“In light of the current economic situation that has not yet recovered and the loss of 745,000 jobs as of July 2020, the government through Khazanah Nasional does not need to rush and should reconsider the feasibility 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 EcoWorld’s stock has fallen to RM0.39 compared to RM1.40 five years ago, before further voicing his concerns about the company’s cash flow and debt.
“If this continues, it is impossible for Khazanah to be seen as a ‘savior’ of EcoWorld when forced to inject large amounts of funds, while reminding us that the housing market for the next few years is destined to weaken,” he said.
Furthermore, Fahmi said that reducing Khazanah Nasional’s stake in UEM Sunrise from 66% to 43% in the event of the merger would be a loss for the rakyat.
EcoWorld said in a presentation to Bursa Malaysia that it received the proposal from UEM Group, UEM Sunrise’s main shareholder, last Monday.
But the proposal has become the epicenter of another controversy involving state-linked companies under the Perikatan Nasional government, as opponents interpret it as an attempt to rescue a besieged company.
Khazanah Nasional holds a controlling stake in UEM Sunrise through UEM Group, at 66 percent.
The proposed merger will take place through an exchange of shares and guarantees. Upon completion, UEM Group will remain the largest shareholder in the merged entity with 43 percent.
UEM Group said the consolidation exercise would leverage the strengths and capabilities of UEM Sunrise and EcoWorld, as moderate macroeconomic conditions worsened by the outbreak are forcing realtors to pool resources to survive.
