(AFP) The government confirmed today it would mount a takeover bid as part of moves to restructure Malaysia's most debt-burdened conglomerate.

A government agency plans to take over United Engineers Malaysia Bhd (UEM) as a prelude to restructuring its parent group Renong Bhd, said a statement from Danaharta, the official agency which handles bad loans.

Danaharta said its own managing director Azman Yahya would not take over as head of UEM or Renong, as earlier predicted, and was expected to remain with the debt restructuring agency.

Shares suspended

"He is assisting a government agency in taking over UEM and restructuring the group as part of his portfolio as the managing director of Danaharta," the statement said.

A spokeswoman declined to identify the agency involved. The New Straits Times said it was Khazanah Nasional, the government's investment arm.

UEM has a 32.6 percent stake in Renong, which in turn has a 37.1 percent stake in UEM.

Shares in both companies have been suspended pending what UEM calls the announcement of a "major transaction" on Monday.

Renong, once the investment arm for Prime Minister Mahathir Mohamad's ruling party, has some RM13 billion in outstanding group debt.

It has interests in banks, toll roads, oil and gasfields and real estate.

In public interest

Mahathir, who is also acting finance minister, said the government was looking for a solution to Renong's financial woes.