Maju Holdings amends PLUS takeover proposal

The company has also proposed to bear the toll reduction in full and is in no way seeking financial compensation from the govt

THE bidding war for PLUS Malaysia Bhd is heating up with Maju Holdings Sdn Bhd offering a reduction in tolls from 25% to 36% in a fresh revised takeover bid for the toll road concessionaire.

Maju Holdings has submitted its bid to the government this week, according to the company’s spokesperson in a statement yesterday.

The company has also proposed to bear the toll reduction in full and is in no way seeking financial compensation from the government for it.

“The government currently owes PLUS, approximately RM2.7 billion, in toll compensation and if Maju Holdings takes over PLUS, we are pleased to inform that we will no longer hold the government responsible for these debts,” the company stated.

Hence, the government will save RM2.7 billion by virtue of the fact Maju Holdings will absorb the RM2.7 billion compensation, it said.

Maju Holdings’ revised offer came after a Malaysian-led Hong Kongbased private equity group was reported to have offered to take over PLUS for RM3.5 billion.

RRJ Capital, which manages US$20 billion (RM84 billion) funds sourced mainly from the US and the Middle East, also offered toll discounts of up to 30%.

Khazanah Nasional Bhd holds a 51% stake in PLUS through its wholly owned subsidiary UEM Group Bhd, while the Employees Provident Fund (EPF) holds the remaining 49%.

On Monday, Prime Minister Tun Dr Mahathir Mohamad at the Parliament said PLUS can be sold to private entities, provided that the government can still participate in its future decision-making.

“With this latest offer that we have submitted to the government, existing shareholders of PLUS will benefit from an estimated total equity internal rate of return of 16%.

“This represents a return that far surpasses the cost of equity for a majority of other toll road concessions, both globally, as well as across South-East Asia,” Maju Holdings added.

Maju Holdings noted that it remains committed to investing RM5.3 billion into lighting up the entire length of the highway along with other much-needed enhancements, as part of the proposal and as reiterated on multiple occasions.

“Our operational track record in managing toll roads speaks for itself. We have successfully operated the MEX (Maju Expressway) in a highly cost-effective manner compared to PLUS toll roads that should benefit from economies of scale.

“We have one of the lowest costs per kilometre in the country. As such, we are confident we will be able to reduce maintenance costs for PLUS,” it said.

Maju Holdings is confident that its offer is compelling and will not burden the government, thus helping alleviate the government’s debt situation.

“We would like to reiterate that our enterprise value to purchase PLUS, including debt outstanding to bond-holders, will be RM34.9 billion.

“This purchase consideration is a reflection of the true and fair value of this company and its assets, taking into consideration our intention to provide Malaysian road users with tangible discounts,” it added.

Earlier this week, EPF CEO Tunku Alizakri Alias said the pension fund will consider selling its stake in PLUS for a good offer.

On the proposal brought to the table by Khazanah, Alizakri said the sovereign wealth fund had presented a strong proposal. He, however, did not share any details.

Meanwhile, Khazanah MD Datuk Shahril Ridza Ridzuan said selling PLUS to private entities could prove a “huge moral hazard” as the asset should remain in the ownership of the Malaysian public.

He said Khazanah views PLUS as a “strategic asset” that would be difficult to imagine being in private hands.

“(This is) especially if a lot of the offers coming in are from private entities who just want to acquire the asset at a cheap discount, (but is) still asking the government to guarantee them,” he told reporters after Khazanah’s Megatrends Forum 2019 in Kuala Lumpur on Monday.

He added that Khazanah has been in discussion with the government in respect to this.

Speaking to TV3 in an interview aired last Saturday, he said the offers coming in for the highway asset were at a price significantly lower than its actual value and Khazanah has no interest in selling its majority stake in PLUS.

Sumber: The Malaysian Reserve

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