CASHFLOW problems caused Utusan Melayu Bhd to delay paying its staff the balance of their April salaries.

The publisher of the Utusan Malaysia and Kosmo newspapers will also be late paying the half-month salary for May .

A staff memo dated May 10 sighted by The Malaysian Insight revealed that the company is unable to pay the salaries on time due to the “critical state of its cash-flow.”

“The company understands that the delay in payment will disrupt the day to day activities of staff especially with Hari Raya being around the corner,” said executive chairman Abd Aziz Sheikh Fadzir.

“The company will try to pay the salaries as soon as possible.”

The May salary is expected to be paid when the balance of the April salary is settled.

On August 20, the company was put on Bursa Malaysia’s Practice Note 17 after defaulting on loan repayments to Maybank Islamic Bhd and Bank Muamalat Malaysia Bhd. 

The principal and profit repayments due totalled RM1.18 million.

The group has one year from the day of its entry into the PN17 category to submit its financial regularisation plan to the stock exchange regulator or risk being delisted.

On October 26 last year, the group told Bursa Malaysia that it has submitted a proposal to Bank Negara Malaysia’s Corporate Debt Restructuring Committee (CDRC), to manage its debt exposure.

Utusan has also recently disposed some of its assets to rationalise its financial situation and raise working capital.

It sold a piece of industrial land in Jalan Tiga, a corner shop office unit in Petaling Jaya  and two adjoining semi-detached factories in Taman Shamelin Perkasa.

For the financial year ended December 31,2018, the company widened its net loses to RM186.62 million from RM7.46 million in the previous financial year.

Its revenue fell to RM193.7million from RM245 million a year ago.

The decline in earnings is partly attributable to higher cost incurred by a voluntary separation scheme last year.

The VSS packages which amounted to RM81million drove the group’s costs up by 50%.

Some 700 employees agreed to leave the Umno mouthpiece under the VSS introduced in September.

The Umno-linked media house also saw a change of major shareholder earlier this year.

Utusan executive chairman Abd Aziz Sheikh Fadzir emerged as the controlling shareholder of the group after acquiring a bloc share of 31.6% from the political party.

After the shares changed hands, Umno’s equity interest was pared down to 18.17% from 49.77%.

The Malaysian Insight is awaiting the response of the National Union of Journalists to a request for comment. – May 12, 2019.