In the Edge Weekly 16 Oct 2023, under the article `Batu Kawan deal raises questions that must be answered’ the article profiled the financials for the period 2017 to 2022 for both Umech Land Sdn Bhd and Umech Construction Sdn Bhd as follows:-
The Edge Weekly appears to have sourced the above information from the annual Return which every company has to file with Suruhanjaya Syarikat Malaysia (SSM) for each calendar year not later than thirty days from the anniversary of its incorporation date or its registration date respectively as provided in subsections 68(1) and 576(3) of the Companies Act 2016.
Failure to do so is an offence and if convicted, the company and its directors will face penalties under sections 165 and 169 of the Companies Act 1965.
It is puzzling that in some years e.g for Umech Construction, the financial statements were complete for FY2018 and 2019 but not for other years.
Similarly for Umech Land only the financial statement for FY2021 revealed all the details but not for other financial years.
In a report in the New Straits Times dated 3 Oct 2023, the CM of Penang reportedly was quoted to have said – reproduced ad verbatim herein - PDC had carried out a CTOS search of UMECH, whereby the company's paid-up capital was as much as RM10 million and with 0 per cent gearing ratio considering that all financial financing was channelled directly through the UMECH Construction company (a holding entity of the same company). Based on the review, he said, UMECH did not have any record of bad debts and had the strength to make loans for the financing of the project.
Based on the above summary published in the Edge Weekly, it is clear that regardless of whether it is Umech Land Sdn Bhd or Umech Construction Sdn Bhd, both does not appear to have any cash at bank and secured bank term loan as at the latest record available which was for FY2022 for Umech Land and FY2021 for Umech Construction.
But yet in the announcement by Sunway Bhd to Bursa Malaysia on 5 Oct, 2023, it said Umech Land Sdn Bhd, their subsidiary had paid RM64 million to PDC upon the signing of the agreement with them?
Based on the financial statement of Umech Land, the company reported a loss after tax of RM126 million for FY2022.
How and where did Umech Land fund the payment of the deposit of RM64 million to PDC?
According to the summary in the Edge Weekly, it appears that the paid up capital of Umech Land was issued at RM33.33 million for the financial years ending 2018 to 2022.
In the announcement by Sunway Bhd on 27 Sept 2023, the company, however, announced that the paid up capital of Umech Land increased from RM10 million to RM33.33 million after the entry of Sunway as a shareholder who subscribed for 23.33 million shares at RM1 each.
Does the search by PDC on Umech, regardless of whether it is for Umech Land or Umech Construction revealed a different set of results from what was revealed in the report in the Edge Weekly?
Hopefully PDC does not take NA (Not Available) as meaning Zero as revealed by the CM of Penang.
The CM of Penang said UMECH have the strength to make loans for the financing of the project.
Maybe the CM should ask which bank or funders that is willing to lend to a company that does not report any revenue but report losses for the last 5 years from FY2018 to FY2022 for this project.
On the strength of its holding company Sunway?
But when the proposal was submitted and deliberated by PDC, Sunway have yet to participate in Umech Land as a shareholder.
Sunway only revealed their participation in Umech Land 2 days before they announced the signing of the agreement with PDC.
On 17 Oct 2023, PDC announced that they have decided to terminate a joint venture agreement by giving UMECH Land a three months' notice based on clause 19 of the PDC - UMECH Land Sdn Bhd Enterprise Agreement on the basis that the change in the majority of the equity structure of UMECH Land to the extent that there is a change in the party controlling and leading the project that is implemented was done without notifying and obtaining PDC's official approval.
PDC also said they will be advertising through various channels of mass media through a Request For Proposal (RFP) for a proposed collaboration with the PDC to advance the Batu Kawan Industrial Park (BKIP) 2.
Why 3 months notice?
Yes, the excuse is it was done in accordance to the clause set out in the agreement.
But if within the 3 months, Umech Land were to unwind the investment by Sunway into the company i.e the 2 original shareholders were to purchase back the shares they issued to Sunway and reverting back to only 2 individuals as the shareholders of the company, would PDC allow the agreement to proceed as per agreement i.e the joint venture was with Umech Land with its 2 original shareholders?
PDC in announcing the termination did not sufficiently address the issue why the agreement signed was with Umech Land when it was Umech Construction that presented the proposal to PDC Board as represented by the CM of Penang in a report in the New Straits Times dated 3 Oct 2023.
Were PDC aware of this and if yes, did they consented to the change from Umech Construction to Umech Land when they signed the agreement?
Based on the report from The Edge Weekly and also the 2 announcements made by Sunway to Bursa Malaysia, it appears that Umech Land has always been owned by 2 individuals and not Umech Construction.
If that is the case, legally Umech Construction has no legal interests or ownership in Umech Land.
So why should Umech Construction fund Umech Land as reportedly represented by the CM of Penang in a report in the New Straits Times dated 3 Oct 2023?
So did the PDC management misled the CM of Penang who is also the Chairman of PDC or the CM misled the public?
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