PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - Employees of Malaysia's Utusan Group were told to pack up their belongings and leave the office by 1pm on Wednesday (Oct 9) as the cash-strapped company officially ceased operations.
Executive chairman Abd Aziz Sheikh Fadzir said poor cash flow, mounting debts and declining sales led to its board of directors on Monday approving the Creditor's Voluntary Liquidation proposal and appointing UHY Advisory (KL) as interim liquidator.
"This step had to be taken because the board of directors were of the view that the company is no longer solvent to continue business.
"For that reason, the company will cease operations on Wednesday, 9 October 2019," said Datuk Abd Aziz in a statement.
Utusan publishes Utusan Malaysia, one of the country's oldest Malay language newspapers. It also publishes tabloid Kosmo!.
Mr Abd Aziz said that since a few years back, Utusan Melayu had gone through the most critical business period since it started operating 80 years ago.
The situation worsened after May 2018, he said, adding that much effort was made to put the company in a more stable position but to no avail.
Among the steps taken were to offer the Voluntary Separation Scheme (VSS), which saw more than 700 workers being let go, he said.
"The company has also sold off assets belonging to the company and group to support the capital and get a sufficient cash flow.
"However, the declining daily circulation of Utusan Malaysia and Kosmo! and the target of RM4 million (S$1.32 million) advertisements per month which we failed to achieve caused Utusan's cash flow to become more critical," he said.
This not only caused the workers' salaries to be delayed but also created unpaid debts, he said, adding that the company is now facing various legal actions by creditors.
The workers were told that their eligibility for termination benefits was subject to the provisions of the law and that this would be handled by the liquidators.
The liquidators will be holding a briefing for all workers on Oct 30 at 3pm at the company premises, said Mr Abd Aziz.
"Any further questions can be brought up during this briefing session," he said.
Utusan Malaysia was first published as Utusan Melayu in Jawi in 1939 in Singapore.
It was founded by Mr Yusof Ishak, who later became the first president of Singapore, and Mr Abdul Rahim Kajai, known as the father of Malay journalism.
Its office was relocated to Kuala Lumpur in 1959. The romanised version of Utusan Melayu, Utusan Malaysia, started printing on Sept 1, 1967.