Nationalised UEM undergoes another major revamped
United Engineers Malaysia (UEM) today unveiled a last-phase revamp to turn around the fortunes of the debt-ridden conglomerate and ensure its long-term survival.
The group trimmed its RM30 billion debt by nearly half to about RM17 billion at the end of last year after a massive restructuring exercise in late 2001, officials said.
UEM, which was nationalised in 2001, owns 42 percent of Malaysia's most indebted group Renong.
United Engineers Malaysia (UEM) today unveiled a last-phase revamp to turn around the fortunes of the debt-ridden conglomerate and ensure its long-term survival.
The group trimmed its RM30 billion debt by nearly half to about RM17 billion at the end of last year after a massive restructuring exercise in late 2001, officials said.
UEM, which was nationalised in 2001, owns 42 percent of Malaysia's most indebted group Renong.
Under a complex final phase revamp, UEM said today it had formed a new company to take over Renong's listing status and would sell non-core assets and unprofitable businesses to cut the group's debts.
The new company is known as Global Converge and will later be renamed UEM World Bhd.
The exercise would help Renong trim its outstanding special purpose vehicle (SPV) bonds to a more manageable level of RM1.9 billion from RM3.7 billion currently, it said.
The formation of a new company would help the group build on its core businesses and enhance shareholder value, rather than being distracted by restructuring the huge outstanding SPV bonds, it said.
Long-term solution
Renong, in a separate statement, said the proposals "represent a long-term solution to turn around the prospects, address the earnings and balance sheet position, and ensure the long-term viability" of the group.
It said the reduction in SPV bonds would generate interest savings of RM278.60 million a year for the group.
The exercise would also streamline the group's businesses into four key areas - engineering and construction under Intria, healthcare under Pharmaniaga, environmental services under Kualiti Alam and property development under Renong.
Under the plan, UEM's unit, Projek Penyelenggaraan Lebuhraya Bhd. (Propel), would be delisted and taken private at a cost of RM210 million.
To consolidate all construction operations and avoid duplication of activities, Propel and another unlisted unit UE Construction would be injected into Intria, it added. UEM holds a 44.6 percent stake in Intria.
The massive debt burden of Renong, once the investment arm for Prime Minister Mahathir Mohamad's ruling United Malays National Organisation, has previously been a major obstacle to Malaysia's efforts to woo foreign investors back to its stock market. - AFP
