No go for Maju’s PLUS bid, says prime minister

Najib: Govt welcomes all takeover or privatisation proposals for PLUS, but proposals need to be practically viable

By P PREM KUMAR & DASHVEENJIT KAUR / Pic By MUHD AMIN NAHARUL

The government has rejected a bid from Maju Holdings Sdn Bhd to take over highway concessionaire PLUS Malaysia Bhd, a deal that could be worth over RM30 billion, said Prime Minister Datuk Seri Mohd Najib Razak.

Najib, who is also the finance minister, said the government is concerned on the financial position and ability of Maju Holdings as a private limited entity, to fund such a large corporate exercise.

“Because there are uncertainty and risk in ability of Maju Holdings, as well as unclear funding source, the government currently does not have plans to dispose its holdings in PLUS,” he said in a written parliamentary reply yesterday.

He was responding to a query from Petaling Jaya Selatan MP Hee Loy Sian who asked the government to state the outcome of Maju Holdings’ proposal to acquire PLUS.

Earlier this month, The Malaysian Reserve reported the government had categorically rejected the proposed corporate exercise by Maju Holdings executive chairman Tan Sri Abu Sahid Mohamed to fully acquire the highway operator PLUS.

The Finance Ministry and the Economic Planning Unit were negative on the proposal which could be economically unviable, sources had said.

Najib said Maju Holdings had earlier submitted a non-binding letter of intent to take over PLUS on Sept 5.

The letter was forwarded to shareholders of PLUS, namely UEM Group Bhd and the Employees Provident Fund (EPF). Khazanah Nasional Bhd, which owns UEM, was also notified.

Najib said while the government welcomes all takeover or privatisation proposals for PLUS, the proposals need to be practically viable.

The government does not wish to witness a repetition of Perwaja Holdings Bhd, a former government-owned steel firm which had to be ceased post-privatisation, said Najib.

“The (PLUS) takeover proposal cannot be evaluated based on the merits of no toll hike or low maintenance cost.

“The proposal has to fulfil the government requirements, which include operational and financial capabilities to manage the North South Expressway for a long term,” Najib said.

Therefore, Najib said Maju Holding’s proposal had to be substantiated with its funding source which also must possess strong operational skills.

The criteria would be essential to ensure that PLUS — a national strategic asset — would not face financial difficulties in case of economic shocks or foreign currency volatility.

“This is important for the government, so that it does not have to step in to inject funds or bailout the asset during difficult times,” said Najib.

Abu Sahid had publicly expressed interest of acquiring PLUS — all 51% stake held by UEM Group and the 49% owned by EPF.

The UEM Group and EPF took over the assets and liabilities of PLUS Expressways Bhd in 2011, in a RM23 billion deal.

PLUS currently operates eight concessions which include the North-South Expressway, New Klang Valley Expressway, Federal Highway Route 2, Seremban-Port Dickson Highway, North-South Expressway Central Link, Malaysia-Singapore Second Causeway, Butterworth-Kulim Expressway and the Penang Bridge.

All of PLUS’ concessions end in December 2038.

Abu Sahid owns Maju Expressway Sdn Bhd, which operates the Maju Expressway (MEX) that links Kuala Lumpur city centre with the Kuala Lumpur International Airport (KLIA) in Sepang.

A 16.8km extension to KLIA will further increase the value of MEX. The extension, known as MEX 2, is slated to cost RM1.7 billion to construct — with the engineering, procurement and construction sum of RM1.29 billion fixed under the contract.

Last available records showed that Maju Expressway registered a net profit of RM7.62 million and RM105.57 million in revenue for its financial year ended Dec 31, 2015. The expressway has a 33-year concession, which started in December 2004.