Put public funds to better use, review EcoWorld-Sunrise merger, says MP

 

PKR communications director Fahmi Fadzil said the share swap from the proposed merger between EcoWorld and UEM Sunrise is estimated to cost RM2.6 billion and the move is seen as a bailout for EcoWorld.

PETALING JAYA: Opposition MP Fahmi Fadzil has urged the government to review the proposed merger between Eco World Development Group Bhd (EcoWorld) and UEM Sunrise Bhd as it comes at a time when the property market is expected to remain weak over the next few years amid economic uncertainties.

The Lembah Pantai MP said due to that, public funds could be put to better use rather than rescuing private entities.

He said the government, through Khazanah Nasional, should not rush into the merger and should reconsider its plans as 745,000 Malaysians are jobless as of July 2020 and “the government needs to work harder to save the people, not private companies”.

On Oct 5, it was reported that UEM Sunrise, the property arm of Khazanah Nasional, had received a letter of proposal from UEM Group Bhd for a merger with private property developer Eco World Development Group Bhd.

The announcement on Bursa Malaysia indicates UEM Sunrise’s board of directors received the letter from UEM Group on Oct 2, proposing for the two companies to merge through an exchange of shares and warrants.

EcoWorld will subsequently be delisted from Bursa Malaysia.

Fahmi, who is PKR communications director, added the share swap from the merger is estimated to cost RM2.6 billion, and the move is seen as a bailout for EcoWorld, held by several private entities, using public funds.

He said EcoWorld shares dipped to 39 sen from RM1.40 five years ago, adding that EcoWorld’s debt and cash flow conditions are also of great concern.

“If it is continued, Khazanah may be seen as the ‘saviour’ of EcoWorld to inject large funds, especially when the real estate market is expected to remain weak for the next few years.” - FMT