In descend proposal

Federal Government is unclear on Maju Holding’s proposal to take over PLUS highway system

The Mole story based on Bernama report:

Govt concerned over Maju Holdings’ bid for PLUS

by Syndicated News

Second Finance Minister Datuk Seri Johari Abdul Ghani

Second Finance Minister Datuk Seri Johari Abdul Ghani

Syndicated News

Written by Syndicated News

PUTRAJAYA — Sept 28, 2017: The government is concerned over Maju Holdings’ proposal to buy PLUS because it doesn’t want the nation’s strategic assets to eventually fall into foreign hands if they were sold.

When commenting on this today, Second Finance Minister Datuk Seri Johari Abdul Ghani spoke of similar proposals that were rejected.

“We do not know the source of the fund. If it is an offshore borrowing we are worried that national assets would fall into foreign hands if a loan could not be paid,” he said on the sidelines of Fiesta Labur PNB 2017 here.

Maju Holdings recently disclosed that it had made a bid of more than RM36 billion to take over PLUS Malaysia Berhad. PLUS is controlled by the UEM Group and the Employees’ Provident Fund.

The Khazanah Nasional-owned UEM has a 51 per cent stake of the highway concessionaire while EPF owns the rest.

Bernama recently reported that if EPF were to sell its stake, some 14.5 million contributors may lose out on a steady stream of dividend.

However, they could heave a sigh of relief as EPF Chief Executive Officer Datuk Shahril Ridza Ridzuan had assured them that EPF did not intend to sell its stake.

At the event, Johari said Bank Negara´s findings on the low financial literacy among Malaysians was a cause for concern for the government.

This is because lack of financial understanding and management knowledge can bring about some disadvantages, including uncontrollable debt burden commitment and living beyond one’s means.

“Through Fiesta Labur, the government hopes Malaysians will be more sensitive to good financial planning and management practices,” said Johari.

Held for the second time, the PNB´s three-day Fiesta Labur offers financial planning services for free, as well as financial activities.

****************

Also in NST story:

Government asks Maju Holdings to disclose source of financing for RM36 billion offer to buy Plus Malaysia

Second Finance Minister Datuk Seri Johari Abdul Ghani said if the fund was sourced from overseas, the government must be informed on the type of financial model to prevent the national asset from falling into foreign entities. (Pic by MOHAMAD SHAHRIL BADRI SAALI)

PUTRAJAYA: The government has asked Maju Holdings Sdn Bhd to disclose its source and mode of financing for its RM36 billion offer to buy Plus Malaysia Bhd, the country’s largest highway concessionaire.

Second Finance Minister Datuk Seri Johari Abdul Ghani said if the fund was sourced from overseas, the government must be informed on the type of financial model. This is to prevent the national asset from falling into foreign entities.

“We want to know the source of funding… whether it is based on loan or not,” Johari told reporters after launching Fiesta Labur PNB 2017 here yesterday.

“If there is any proposal – first things first, we want to know where the funding comes from. If the fund is loan based and they are unable to repay, it would affect the country’s assets, which could potentially fall into foreign investors,” he added.

Johari stressed that the government had refinanced the Plus highway development cost via the Employees Provident Fund (EPF) and UEM Group Bhd.

UEM, which is fully-owned by Khazanah Nasional Bhd, owns a 51 per cent Plus stake, while the remaining 49 per cent belongs to the EPF.

“We want to understand the financial model of the proposal. For example, where they get the money from? And how they can assure that the money can be paid back,” Johari reiterated.

He clarified that he had yet to receive the proposal from Maju Holdings.

He added that there was a few proposals to take over Plus by numerous parties previously.

In March 2014, Tan Sri Halim Saad had put in an unsolicited bid to take over Plus, through his private investment vehicle Idaman Saga Sdn Bhd, but the offer was rejected by the government.

A Maju Holdings spokesman recently confirmed that it had submitted a formal bid to UEM and the EPF to buy 100 per cent of Plus and its subsidiaries.

The company was said to have sent a letter of intent and roped in independent investment banking advisory firm Evercore Group LLC to help with the acquisition.

Plus has five concessions including Projek Lebuhraya Utara-Selatan Bhd which has under its umbrella the North-South Expressway, New Klang Valley Expressway, Federal Highway Route 2 and Seremban-Port Dickson Highway.

****************

 

In a story by The Mole a week ago, Maju Holdings Executive Chairman Tan Sri Abu Sahid Mohamed said they have made a proposal via New York based investment bank Evercore to Khazanah National Bhd. for the Plus highway system take over.

However Khazanah did not respond.

Maju Holdings boss perplexed PLUS takeover proposal rebuffed

by Zaidi Azmi

perwaja 05

Zaidi Azmi

Written by Zaidi Azmi

KUALA LUMPUR – September 21, 2017: The boss of Maju Holdings, Tan Sri Abu Sahid Mohamed, is perplexed that his company’s proposal to take over  PLUS Expressway Berhad, which manages some of the country’s major highways, has been rebuffed.

This also leaves the company’s group executive chairman to describe Khazanah Nasional and the Employees’ Provident Fund, both major shareholders of PLUS, as being very evasive.

But based on what happened a few years ago, Abu Sahid should have no compelling reason to be shocked and in disbelief.

In 2014, a bid by a group linked to former Renong Berhad executive chairman Tan Sri Halim Saad, the architect behind the building of the North-South Highway and the man who also oversaw PLUS for several year, was also rejected apparently for giving incorrect information.

The bid also guaranteed no increase in toll rates plus a reduction in the then rates.

A person familiar with banking and finance and whose former company provided consultancy services on mergers and acquisitions who read the bid but wished to remain anonymous described it as brilliant and one that should be supported, not rejected.

News of Maju Holding’s proposal to acquire PLUS and its subsidiaries by way of purchasing all shares from the main shareholders was first reported two months ago.

PLUS chairman Tan Sri Mohd. Sheriff Kassim confirmed that he had received a copy of Abu Sahid’s offer on September 11, with EPF making clear it had no intention of selling its shares.

“We haven’t discussed anything and they’re already saying no. Why are they so reluctant to meet me?” asked Abu Sahid when met by The Mole yesterday evening.

Insisting that his proposal was credible, Abu Sahid said it was drafted by renown international boutique investment bank, Evercore Partners.

He is also baffled by negative public feedback over the proposal, despite him guaranteeing a 20-year-long no toll hike for all highways under PLUS.

“Malaysians cry foul whenever toll rates are increased but when I told them I can guarantee a static toll rate for 20 years some also protest.

“It can be done. Evercore had done the maths and they told me that it is still profitable to operate the highways even if I do not raise the rates for 20 years,” stated Abu Sahid.

One concern echoed by the detractors is that it would deprive the 14.5 million EPF contributors a steady stream of dividend income.

Concurring that the contention may be valid, Abu Sahid however argued that the amount of annual dividend that EPF contributors has been getting from its RM400 million earnings from PLUS is only RM28 per contributor.

Abu Sahid said the proposal offers EPF and Khazanah a RM2 billion payment in cash each and that the amount paid to EPF will enable its contributors to enjoy a one-off RM142 dividend.

Maju Holding currently operates the Maju Expressway and is in the midst of constructing the Lebuhraya Putrajaya – Kuala Lumpur International Airport extension project.

PLUS has five concessionaires:

1. Projek Lebuhraya Utara-Selatan Sdn. Bhd. which operates the North-South Highway, New Klang Valley Expressway, Federal Highway Route 2 and Seremban-Port Dickson Highway.

2. Expressway Lingkaran Tengah Sdn. Bhd. which operates the North-South Highway Central Lin).

3. Linkedua (M) Berhad which operates the Malaysia-Singapore Second Link.

4. Konsortium Lebuhraya Butterworth-Kulim Sdn. Bhd., which operates the Butterworth-Kulim Expressway.

5.  Projek Lebuhraya Usahasama Berhad which operates the Penang Bridge.

******************

In the proposal, it was believed that Maju Holdings offered RM2 billion cash to UEM Bhd, and EPF each and takeover the RM30billion plus borrowings.

However, it was not disclosed how the borrowings would be taken over.

It is unsure whether Maju Holdings could finance the RM30 billion plus borrowings taken over from UEM and EPF.

It is assumed that the Maju Holdings would raised from the debt market. If it is so, then it is most likely that the PLUS highway System assets would be pledged as the collateral for the financing scheme.

Currently, UEM and EPF is financing the entire borrowings from local banks and debt market.

Considering major banks such as Maybank is controlled by PNB, CIMB is under Khazanah and RHB is under EPF, there is a lot of comfort provided in event of default on UEM part to meet its financial obligations.

What is interesting that Abu said Maju Holdings is able to offer highway users no increase in toll rates for twenty years,

PLUS has not raised the highway toll rates since 2005, despite the PLUS highway system has been upgraded since which include additional lanes and bigger and better rest and recreation facilities.

There have been the arguments that despite the agreement to review toll rates every three years, PLUS had maintained the same rates since the last twelve years is translated through the concession being fulfilled by Federal Government grant.

On the same note, UEM have provided more than RM1 billion in profits year-on-year to the shareholders, mainly Khazanah and EPF.

Probably if Maju Holdings could package a better proposal in eyes of the public, backed by convincing remarks by local investment banks repressing the local debt and capital market, the Federal Government might be attracted sit down address the proposal accordingly.

 

 

 

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Published in: on September 28, 2017 at 22:00  Comments (1)  

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One CommentLeave a comment

  1. Why should the government worry about this proposal? Plus is owned by Khazanah and EPF. Both are controlled by the government. Just tell them straight on the face. NOT INTERESTED.


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