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Company says it has received approval to conduct due diligence

PETALING JAYA: MMC Corp Bhd confirmed that it had submitted a proposal to the Minister of Finance Inc (MOF) to undertake a due diligence exercise on KTM Bhd (KTMB) for the purpose of taking over the operations of KTMB.

It said this in a reply to a query by Bursa Malaysia yesterday due to a news report on the subject.

“MOF, vide its letter dated Dec 1, had given its approval for MMC to conduct the said due diligence subject to the signing of a non-disclosure agreement between the parties.

“We will make the appropriate announcement to Bursa Malaysia in accordance with the requirements of the Main Market listing requirements if there are any material developments in this respect,” said MMC.

MMC said yesterday it had embarked on an exercise to take over the loss-making national railway company and planned to inject about RM1bil into KTMB.

A source told StarBiz that KTMB had been asked to delay its restructuring exercise due to the due diligence exercise by MMC.

The Treasury, in reply to the recent Auditor-General's (AG) report, said KTMB would undergo a two-year corporate restructuring programme to turn around the ailing national rail operator and a consultant would be hired to manage this.

Nevertheless, according to Railwaymen's Union of Malaya president Abdul Razak Md Hassan, KTMB should not be taken over by any private companies as there would be conflict of interest in making profit and rendering social services to the public.

“It's hard to find any railway company that makes a decent profit. And this company (MMC) is making a huge investment and it surely expects some kind of return.

“In the past, KTMB had been taken over by Marak Unggul Sdn Bhd from 1997 to 2001 a move that had negatively affected the workers of KTMB.

“There was a surplus of workers and cases of constructive dismissal where high ranking officers were required to do the work of lower rank staff,” he said.

On Aug 1, 1997, Marak Unggul took over the management and operation of KTMB which reflected the effort to fully privatise KTMB. However, the contract ended on Dec 31, 2001.

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