Merger will leave UEM Sunrise saddled with debts, warns Najib

 

An artist’s impression of UEM Sunrise’s Puteri Harbour development on the southern coast of Johor, one of its many projects. (UEM Sunrise pic)

PETALING JAYA: UEM Sunrise Berhad will be the ultimate loser if a proposed merger with EcoWorld Development Group goes through, former prime minister Najib Razak said today, warning that UEM Sunrise would become laden with debts.

UEM Sunrise is a property arm of sovereign wealth fund Khazanah Nasional.

“After reviewing the accounts of both companies, I feel there is no need for UEM Sunrise to buy EcoWorld for their survival because they have more than RM700 million in cash and their debts are low,” he wrote on Facebook.

“If UEM Sunrise buys EcoWorld, UEM will take over debts worth billions from Eco World as well as land purchased at high prices.

“It is Eco World which needs UEM Sunrise because their debt burden is high and the land they bought over the last few years was at a high price,” he said.

Najib Razak.

Najib said EcoWorld shares have dropped in value from RM1.70 to 40 sen each.

“In my opinion, the loser (in the merger) will be UEM as well as Khazanah Nasional and it involves the people’s money,” Najib said.

Najib said UEM Sunrise owned land that was purchased decades ago and their value had increased over time.

For instance, its 2,000ha in Iskandar had been valued at RM10 per square foot in 1995. “If re-evaluated, the Iskandar land alone would have increased the value of UEM’s land holdings by RM10 billion. The value of land in Iskandar has increased to RM60 per square foot.”

Najib further said Iskandar is also one of the main stations along the Singapore-Kuala Lumpur HSR express train route and the area is close to the Bukit Chagar station for the Singapore-Johor RTS train.

Najib also questioned the timing of the merger proposal. He said he found the timing to be strange, coming at a time of the Covid-19 pandemic, while plans for the merger had begun last year while Pakatan Harapan was in power.

Najib said the value of Khazanah Nasional’s net assets had fallen from RM91 billion in 2018 to RM73 billion during the Pakatan Harapan administration from 2018-2020.

By contrast during his tenure as the prime minister, Khazanah’s asset value had gone up from RM32 billion at the end of 2008 to RM116 billion in 2017.

Najib said UEM Sunrise recorded a pre-tax profit of RM433.6 million in 2017.

“However, after the PH government stopped, delayed and even sold real estate projects by UEM Sunrise, including their projects in Australia, it caused UEM Sunrise not to have that many new projects.

“Therefore, UEM Sunrise’s revenue fell almost 90% in the second quarter of 2020 because there were not many projects and it recorded a loss of RM93 million,” he said. - FMT