(Petaling Jaya, Thursday): The Malaysian Trades Union Congress has declared its opposition to any plan by the Employees’ Provident Fund to buy a stake in a highway toll concessionaire Projeik Lebuh-raya Utara-Selatan Bhd(PLUS).
MTUC Secretary-General G. Rajasekaran said that EPF-PLUS deal was a rescue plan for UEM Bhd, which wholly owns PLUS.
Two top MTUC leaders are members of the EPF Board, namely MTUC President Zainal Rampak and CUEPACS Secretary-General N. Siva Subramaniam and they should block the proposed EPF bail-out of UEM through a RM1.5 billion acquisition of a reported 20% stake in PLUS.
UEM had initially financed the highly-controversial RM2.34 billion acquisition of 723 million Renong shares or 32.6 per cent stake in Renong with borrowings and is seeking to raise funds by selling its equity in PLUS for RM1.5 billion. The cash from the sale would reduce UEM’s gearing to 2.5 to three times debt-to-equity from four to five times.
Zainal and Siva Subramaniam, as well as other trade union leaders serving on the EPF Board, should safeguard the interests of the nine million EPF contributors and demand a full and satisfactory explanation to three questions:
Firstly, why should EPF be involved in the bail-out of UEM or any troubled company as a result of the economic crisis? Between Sept.30 and October 1 last year, just before the outrageous RM2.34 billion Renong acquisition, EPF bought 65.91 million shares in UEM.
It has been calculated that at RM10.50 apiece, EPF would have forked out a total of RM645.53 million for these UEM shares. At the end of trading at the Kuala Lumpur Stock Exchange yesterday, UEM counter ended at RM3.92 per share. This would mean that EPF would have lost over RM433 million from this acquisition.
In acquiring the 65.91 million UEM shares, was EPF involved in an exercise to bail out and prop up UEM, which was later used to bail out and prop up Renong?
The second question is whether the RM1.5 billion price tag for 20 per cent of PLUS was reasonable and fair to the nine million EPF contributors, as there is considerable uneasiness caused by recent corporate restructurings, for instance, in the RHB buy-up of Sime Bank where KUB, which owns only 30 per cent of Sime Bank, would be getting RM670 million while Sime Darby gets only RM100 million for 60.35 per cent of Sime Bank. The latest news that KUB has entered into a Memorandum of Understanding with Permodalan Nasional Bhd. for the acquisition of 267.565 million ordinary shares of 10 sen each, representing 32 per cent equity of Malaysia Mining Corporation has also raised eyebrows all-round.
There are market analysts who are adamant that EPF is getting a raw deal, as based on PLUS’ paid-up capital of RM650 million, 20% for RM1.5 billion works out to RM11.54 a share - which is very well in excess of what would be the worth of PLUS shares if it had gone for a listing. One estimate is that PLUS shares should only fetch between RM6 and RM7.
The third question is even more fundamental. Should EPF acquire a major stake in PLUS, the toll operator of the North-South Expressway, when there is growing nation-wide opposition from the people to the North-South Expressway Concession Agreement which allows the toll operator to increase toll rates every year for the next 22 years?
Is this part of a larger design to disarm public opposition to the annual toll rate increase at the North-South Expressway, by giving the public through the EPF a stake in PLUS and therefore a vested interest in the annual toll rate increases - putting the public in an invidious position if they oppose any toll rate increase as it would have a bearing on the declaration of the EPF dividend?
If the MTUC has taken an official position to oppose EPF buying a stake in PLUS, then Zainal, Siva Subramaniam and other workers’ representatives must ensure that the EPF Board take full account of the views of the nine million EPF contributors, and also give the contributors a say as to whether EPF monies should be invested in PLUS, in view of the increasingly widespread opposition to the exorbitant concession agreement on the privatisation of the North-South Expressway and demand that the Concession Agreement be reviewed.
There have also been reports that the EPF would be the substantial provider of funds for RHB’s purchase of Sime Bank.
What is most disconcerting is the market speculation that EPF would provide RM1.5 billion of funds to enable RHB to carry out the merger of RHB and Sime Bank, although RHB would be paying RM852.2 million for the entire stake, of which RM100 million will be paid to Sime Darby Bhd. and RM670 million to KUB Malaysia Bhd., which owns 60.35 and 30 per cent equity in the bank respectively
MTUC should also make clear its stand whether it supports the use of another RM1.5 billion EPF funds to enable RHB to acquire Sime Bank.
(19/3/98)