EPF should explain why it bought 65.91 million shares in UEM shortly before the UEM-Renong deal which has resulted in the EPF losing some RM400-500 million

Media Statement
by Lim Kit Siang

(Petaling Jaya, Tuesday): Employees Provident Fund should explain why it bought 65.91 million shares in UEM between Sept. 30 and Oct. 31 last year, just before the outrageous RM2.34 billion acquisition 32.6 per cent or 722.9 million Renong shares which has resulted in the EPF losing some RM400-500 million. According to the EPF's declaration of interest to the company dated Dec 10, it bought a total of 65.91 million shares in UEM between Sept 30 and Oct 31 last year. Since then, UEM's share price has plunged dramatically on news of its controversial purchase of a 32.6 per cent stake in parent company Renong Bhd.

Trading in UEM shares has since been twice suspended, the first time since Nov 25, after closing the previous day at RM3.24, which represents a 68.8 per cent drop from its Sept 30 close of RM10.40, and a 41 per cent fall from its Oct 31 close of RM7.90. UEM traded between RM11.50 and RM7.90 during the month of October.

Yesterday, UEM chalked up a second catastrophe for itself and the Kuala Lumpur stockmarket within less than two months after another shocking announcement on Saturday of the reinstatement by the Foreign Investment Committee (FIC) for UEM from having to make a mandatory general offer for Renong Bhd shares it and other parties acting in concert with it, namely Tan Sri Halim Saad and Time Engineering, do not already own.

Trading on UEM hit the limit down of 30 per cent in the first minute, plunging by 97 sen from RM3.24 per share to RM2.27 per share, and was together with Renong, suspended from trading in the first minute of trading.

EPF had said the bulk of the shares, 62.07 million of them, were bought on Sept 30 through the open market or via its portfolio managers. However, only 3.71 million UEM shares were traded that day. Moreover, offmarket trades show only 29.5 million shares were crossed on that day.

The business weekly, Business Edge in its issue of 5th January 1998 under the heading "EPF’s exposure to UEM", calculated that at RM10.50 apiece, the EPF would have forked out a total of RM645.53 million for these UEM shares. Its investment would be worth only RM201.11 million at the time of its publication - less than a third of what it paid.

This was before the 30 per cent limit-down of UEM yesterday, which would devalued EPF’s investment in UEM by another 30 per cent, or RM140.77 million or a loss of RM513.76 million from its acquisition of 65.91 million UEM shares if it had paid at an average of RM10.50 per share.

EPF should explain what are the actual losses as a result of its acquisition of 65.91 million UEM shares between Se[pt. 30 and Oct. 31 last year and the reasons for such a purchase, and how the interests of the workers would be protected.

UEM was one of the blue-est of blue chips in the country, commanding RM24.30 in the previous year but is now danger of heading towards Second Board status.

EPF should explain whether its purchase of the 65.91 million UEM shares was to bail out and prop up UEM, which was later used to bail out and prop up Renong - with disastrous results and how the workers’ provident funds could be used for such a purpose.


*Lim Kit Siang - Malaysian Parliamentary Opposition Leader, Democratic Action Party Secretary-General & Member of Parliament for Tanjong