KUALA LUMPUR (Nov 16): Loss-making media group Utusan Melayu (Malaysia) Bhd, which is formulating a regularisation plan to address its Practice Note 17 (PN17) status, is planning to sell a leasehold plot located in Jalan Tiga off Jalan Chan Sow Lin here for RM18 million, to unlock its value and raise working capital for the group.

In a stock exchange filing yesterday, the Umno-controlled group said it has inked a conditional sale and purchase agreement with local private company Strong Skyhutch Sdn Bhd for the proposed disposal, which is expected to bring in a net gain of about RM16.9 million for the group.

The industrial land that measures 4,715 sq m is located at Lot 648 and has 60 years left to its lease. It had a market value of RM17.8 million as at March 19 this year, according to a valuation by W M Malik & Kamaruzzaman. The plot’s audited net book value was RM196,174 as at end-2017. Its original cost of investment was RM813,191, incurred in end-1979.

Utusan expects the proposed disposal to be completed by June next year.

Net proceeds from the proposed disposal will be used partially to fund working capital requirements of the group to finance its day-to-day operations, including payment to creditors, as well as administrative expenses like staff salaries, and other operating expenses. “The actual utilisation has not been determined at this juncture and may differ at the time of utilisation,” Utusan said.

In a separate filing earlier the same day, Utusan announced that its regularisation plan will not result in a significant change of its business direction or policy.

The group, which publishes the Utusan Malaysia and Kosmo! newspapers, has been suffering losses since its financial year ended Dec 31, 2012.

It slipped into PN17 status on Aug 20 after defaulting on its principal and profits payment totalling RM1.18 million to Maybank Islamic Bhd and Bank Muamalat Malaysia Bhd and was unable to provide a solvency declaration to Bursa Malaysia.

On Sept 21, Utusan was reported to have offered a voluntary separation scheme to more than half of its 1,500 workers as part of its restructuring exercise to reduce overall costs.

Utusan shares rose 0.5 sen, or 3.57%, to 14.5 sen yesterday, bringing it a market capitalisation of RM16.07 million. In the past 12 months, the stock has declined over 61%.

This article first appeared in The Edge Financial Daily, on Nov 16, 2018.

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