(AFP) updated version

Conglomerate United Engineers Malaysia (UEM) unveiled today an ambitious restructuring plan to trim the group's RM30 billion debt by next year.

UEM said it planned to list highway toll operator unit Projek Lebuhraya Utara Selatan (Plus) by mid-2002, divest assets in six companies including five listed firms and streamline the group into five core business units.

The government earlier this year took over UEM, which in turn owns 31 percent of Malaysia's most indebted group Renong, which has 14 listed companies in its stable.

The massive debt burden of Renong, once the investment arm for Umno, has been a major obstacle to Malaysia's efforts to woo foreign investors back to its stock market.

Plus debts

UEM said the key to its revamp plan would centre on restructuring of Plus debts through a combination of early redemption of PLUS bonds, debt refinancing and conversion of debt to equity.

The move would cut the debts of Plus - which runs the country's longest highway - RM16.5 billion to RM7.2 billion. This would be followed by an initial public offering, expected to be the largest in Malaysia in the last five years.

"The overall success of the group's restructuring is dependent on a successful listing of Plus," UEM managing director Abdul Wahid Omar told reporters.

"We plan to eventually reduce our debt to RM14 billion after the divestments and the listing of PLUS in mid-2002... we should be able to return to profitability."

The restructuring would enable UEM to focus on its core businesses and a key move was the removal of cross shareholdings within the group, he added.

Legal action

UEM also announced it had terminated a "put option" with Renong former executive chairman Halim Saad, a pact which had clouded the group's previous attempts to restructure.

Halim was to pay a total of RM3.2 billion to buy back UEM's stake in Renong - three installments of RM100 million each in February, July and December and the balance in May 2002.

But he has defaulted on his second installment and the third is on Friday this week.

Abdul Wahid said UEM was considering legal action against Halim but was unaware of the fate of Halim's 16-percent stake in Renong. He also ruled out market talk of delisting Renong.

"We have no plans. There is no reason to delist Renong," he added.

UEM chairman Abu Hassan Kendut said the move to terminate the put option was to put the episode behind to "look forward and keep proceeding with the restructuring" of the group.

Despite moves to divest the group's non-core business, he stressed there would be "no fire sale" of any of its assets.

The group plans to sell stakes in Cement Industries of Malaysia, Ho Hup Construction, Putra, Commerce Asset-Holding, Crest Petroleum and Park May.

Under the plan, the group would be restructured and reorganised into five core businesses - expressway, engineering and construction, environmental services, healthcare and property.