- The Edge reported today that EPMB and Maju Holdings
(through their units Bright Focus Sdn Bhd and Ulimas Sdn Bhd) have mutually
agreed to extend their acquisition agreement for a further 60 days (i.e. June
15 to August 14), as the latter has yet
to obtain federal approval for their proposed RM1.7bil disposal of Maju
Expressway (MEX).
- We had written on 19 May 2012 (MEX: From Maju to EPMB)
that EPMB had emerged as the winner out of six bidders vying for control over
MEX. The other interested parties were believed to have included: (i) PNB
(likely through infrastructure arm, Prolintas); (ii) Datuk Azizul Rahman Abd Samad,
said to be working with the Negeri Sembilan royalties and assisted by Kuwait
Finance House in the corporate finance workings; and (iii) Indonesian tycoon
Peter Sondakh of the Rajawali group fame.
- MEX is the concession holder for the 26km-long expressway
that links Kuala Lumpur to Putrajaya, Cyberjaya and the Kuala Lumpur
International Airport (KLIA). It also provides connectivity between the Middle
Ring Road 1 (MRR1) and Middle Ring Road
2 (MRR2), besides relieving traffic congestion from the city centre.
- The concession runs for 33 years – i.e. from 2004 until
2037 – with about 25 years left under the existing agreement.
- Briefly, the deal entails EPMB acquiring a 100% stake in
MEX from Maju Holdings for ~RM1.1bil - and also assume debts totalling some
RM550mil. In turn, MEX is 96.8%-owned by Maju Holdings.
- The proposal by EMPB has since been in the spotlight,
where earlier reports had indicated that the Maju Group may stand to rake in a
return of over RM600mil after taking
into account a government grant worth RM976mil that partly offsets the
construction cost of RM1.3bil for the highway.
- Apart from that, we reckon that there are scant details on
how the change in ownership would impact the existing concession agreement for
MEX – particularly when dealing with the sensitive issue of future toll rate
revisions.
- We maintain our NEUTRAL stance on the toll concessionaire
sector. Apart from the continued uncertainties on the restructuring of toll
rates in Malaysia, the reported interest by PLUS in both Litrak and SILK
Holdings has since fizzled down.
- For direct exposure to the toll industry, we prefer LItrak
(HOLD; FV=RM3.93/share) – mainly for its decent yields of 4%-5%.
Source: AmeSecurities
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