Utusan Melayu (Malaysia) Bhd, the publisher of Malay daily Utusan Malaysia and several magazines, has announced that it defaulted on two loans today amounting to RM1,184,871.
The Utusan Group was supposed to pay Bank Muamalat RM530,121 and Maybank Islamic Bhd RM654,750, an announcement to Bursa Malaysia today revealed.
The company said it was facing financial constraints and would submit a proposal to restructure the two loans. Utusan Group said it also plans to restructure "all" existing loans.
"The default in payment will give rise to an event of default by virtue of the cross-default provision under the loan documents of the financing facilities undertaken by the company," it said.
The company's board also told Bursa Malaysia that the company was solvent on the basis that the company's assets have a market value exceeding the outstanding sums owed to the banks.
Who is the white knight?
In a separate announcement, Utusan Group told Bursa Malaysia that the company would be issuing new shares to a private investor, not exceeding 10 percent of the current shares issued.
The group hopes to raise RM2,103,943 within four months to repay bank borrowings.
Following this exercise, expected to be completed by Q3, the shareholding of Umno's trustee RHB Nominees (Tempatan) Sdn Bhd will be reduced from 49.77 percent to 45.25 percent.
Utusan Group's share price is now RM0.20, down 68.4 percent since January. Trading for this counter was suspended today.
Utusan Malaysia is the oldest operational Malay newspaper, having launched in 1938.
Apart from Utusan Malaysia, the group publishes tabloid Kosmo! along with URTV, Harmoni, Mastika, Saji, Al-Islam, Infiniti, iSihat, and Hijab Fesyen magazines
Education Ministry project
The Education Ministry recently ruled that schools and public universities were no longer allowed to subscribe to Utusan Malaysia.
In 2016, Utusan Group was awarded an Education Ministry contract to supply 180,000 tablet computers to teachers.
Deputy Education Minister P Kamalanathan had told the Dewan Rakyat last November that Utusan had been given the contract to supply the 430,000 tablets computers that were to be given out to teachers for free.
At the time, Kamalanathan revealed that 182,712 units worth RM152 million (RM809 per unit) had already been delivered.
According to Utusan Group's 2017 annual report, group managing director Mohd Noordin Abbas said the project is expected to be completed this year.
"Revenue from this project is expected to cushion the decline in media business," he said.