UTUSAN Melayu (Malaysia) Bhd, formed in the late 1930s, will today shut down and terminate about 800 employees, said sources.

The Malaysian Insight was told that the decision was taken as the newspaper company is no longer able to shoulder the burden of its debts accumulated over the years, estimated at between RM240 million and RM340 million.

This was confirmed in an internal memo from the management to staff today.

The memo, seen by The Malaysian Insight, said the management agreed to close down operations at a board meeting on Monday, and has appointed UHY Advisory (KL) Sdn Bhd as interim liquidator.

“This move is being taken as the board feels that the company is no longer solvent to continue its business.”

It also said Utusan is stopping its operations with immediate effect, with employees’ last working day being today and their services to effectively end on October 31.

Earlier, several staff members said the announcement will be made at a briefing by department heads this morning.

They said employees were told that Utusan Malaysia and sister publication Kosmo! would not be available starting tomorrow, for a period of two to four weeks.

“Staff have been asked to pack up. They will be briefed today. We will be fired,” said an employee, who requested anonymity.

The Malaysian Insight last night saw several staff members taking home their belongings upon learning about the announcement to be made today.

Also last night, Utusan journalists were not given assignments for today, signalling that there will be no publication tomorrow.

The Malaysian Insight sighted a message on the matter that was shared with reporters at the paper’s bureaus outside Kuala Lumpur.

The National Union of Malay Journalists (NUJ-UM) is scheduled to hold a press conference at noon today.

“We’ve gotten news that (Utusan chairman) Aziz Sheikh Fadzir will make a voluntarily liquidation announcement,” said NUJ-UM secretary Muhammad Basir Abu Bakar.

Two other sources said termination letters were prepared yesterday afternoon, to be handed to staff today.

Employees have been told that some of them will get job offers from Dilof Sdn Bhd, an Utusan subsidiary that had earlier obtained permits to issue Utusan Malaysia and Kosmo!.

“We knew that there would be staff members retained, but it’s only 60 people per newspaper,” said an Utusan reporter.

New publisher

Putrajaya sources said Dilof has held permits to publish the two papers since September 5.

The company, owned by Aziz, was set up on August 23 last year. It was acquired by Utusan on August 26 this year.

Utusan acquired Utusan Digital Sdn Bhd, another firm owned by Aziz, as a subsidiary on the same date. Utusan Digital was set up on October 23 last year.

Four days after taking over the two firms, Utusan was released from Bursa Malaysia, where it had been listed since 1994, for failing to submit its financial restructuring plan.

News on the company winding up came a day after it announced that it would relinquish 70% of its holdings in Dilof to Aurora Mulia Sdn Bhd, which is linked to tycoon Syed Mokhtar Albukhary.

“This is to ensure that the 80-year-old Utusan Malaysia is not buried, and the 15-year-old Kosmo! can continue,” said Utusan in a statement on Monday.

The decision to wind up was made pending a suit over a debt claim to be heard in the courts tomorrow, which could drag the company into bankruptcy, said sources.

By law, a liquidated firm is placed under a liquidator, who will manage its assets and settle its debts.

Among the outstanding debts are the balance of compensation to nearly 800 former employees who opted for the voluntary separation scheme in November last year, and payments due to banks and others.

The law states that after the debts are settled, the value of the remaining assets – if any – is to be returned to shareholders.

Prior to its Bursa delisting, Aziz was reported to be a major shareholder in Utusan through his company, Opulence Asia Sdn Bhd. The former Kulim Bandar Baru MP bought a 31.6% Umno stake in February.

In July, Syed Mokhtar increased his equity stake to 19.72%, making him the second-largest shareholder through Nilam Setar Sdn Bhd, with Umno still holding 18.1%.

Closure imminent

News that Utusan is set to close began emerging seven weeks ago.

On August 19, NUJ-UM organised a picket outside the company’s Kuala Lumpur office, demanding the payment of staff’s outstanding salaries for the past three months.

After the picket, there were fears that Utusan would stop printing as soon as the next day.

Aziz, following a management meeting, announced that Utusan would not be shuttered, and that Utusan Malaysia and Kosmo!’s cover prices would be increased by 50 sen.

“There is nothing we can do,” said an employee.

“This seems like a delayed decision.”

Utusan has struggled with severe financial difficulties over the past few years. Its woes intensified after Barisan Nasional lost the last elections.

The company has taken steps to manage its finances, including slashing staff numbers at the end of last year and selling assets to increase cash flow.

Utusan started out in Singapore in 1939, and moved to Kuala Lumpur in 1959. Two years later, it was owned by BN lynchpin Umno, until after the 14th general election in May last year that saw the pact ousted from power. – October 9, 2019.