RRJ Capital offers to buy PLUS Malaysia for RM3 bil – 20% toll reduction; 20-year concession extension

RRJ Capital offers to buy PLUS Malaysia for RM3 bil – 20% toll reduction; 20-year concession extension

RRJ Capital – a Malaysian-led, Hong Kong-based private equity firm – has made a bid of RM3 billion cash to purchase PLUS Malaysia, which will see the firm acquire a 100% equity interest in the highway concessionaire.

Currently, ownership of the concessionaire is shared between UEM Group – a subsidiary of Khazanah – and the Employees Provident Fund (EPF). The former holds a 51% share in PLUS, with the remaining 49% owned by EPF.

In reports by The Edge and Reuters, the deal will also see RRJ attain both companies’ respective interests in the redeemable convertible unsecured loan stock (RCULS) issued by Project Lebuhraya Usahasama (PLUS), a wholly-owned subsidiary of PLUS Malaysia.

Should the bid be successful, RRJ, via PLUS Malaysia, will be responsible for the operation and maintenance of the 957 km of highways in PLUS’ portfolio. More importantly for motorists, the firm states that it will reduce toll rates by 20% across the board.

RRJ Capital offers to buy PLUS Malaysia for RM3 bil – 20% toll reduction; 20-year concession extension

Additionally, the proposal will also see the existing concession period be extended for another 20 years after it ends in 2038, during which no subsequent increase in toll rates will be implemented. Other noteworthy details of the deal include terminating the existing compensation commitment by the government to PMB in respect of the postponement of toll hikes.

With this, the government will not have to pay RM2.7 billion to PLUS Malaysia from 2020 to 2025 under the current agreement between both parties. However, the government will continue to be a guarantor for some of PLUS’ debt, which currently sits at around RM30 million.

“RRJ is prepared to move quickly with our financial and technical advisors to begin negotiations and due diligence if our proposed offer is accepted,” RRJ said in a letter dated September 25.

The document also states that RRJ would introduce the latest technologies and systems, which are currently being used in countries like Japan, Europe and the United States. These include electronic toll collection systems such as EZPASS in the US, which would not require any toll booths.

RRJ Capital offers to buy PLUS Malaysia for RM3 bil – 20% toll reduction; 20-year concession extension

Other planned changes will see the use of big data and artificial intelligence to study life traffic systems in a bid to reduce traffic congestion, differential pricing systems for peak and non-peak hours, special fast lanes for vehicles with more than two or three passengers, and a dual electronic pricing system. The last item will result in higher toll rates for premium cars and lower ones for non-premium cars.

“There have been several proposals on toll highways. Khazanah itself has submitted its own proposal to the government. Ultimately, it is up to the government to consider these proposals and decide what is best for the country and the people,” a Khazanah spokesman told Reuters.

Prime minister Tun Dr Mahathir Mohamad had previously said that Khazanah will sell assets that are “not useful” to the government as a means to raise funds to pay off the country’s debts.

“There would be some control over certain industries, but as to government involvement in business, we have always believed that the government should not be in business. We’re not good at it,” Mahathir was reported as saying when asked on whether Khazanah would continue to sell down its shares in government-linked companies during a dialogue in New York recently.

RRJ Capital offers to buy PLUS Malaysia for RM3 bil – 20% toll reduction; 20-year concession extension

RRJ’s bid is not the only proposal to acquire PLUS Malaysia, as Maju Holdings also has its hat in the ring with an effective purchase price of RM3.5 billion – RM2 billion in cash and the balance a waiver of RM1.5 billion in compensation due from the government.

Maju’s offer also includes four scenarios, including a 25% reduction in toll rates for a 10-year concession extension, 30% toll reduction for a 15-year extension, 33% toll reduction for a 20-year extension, and a 36% toll reduction for a 30-year extension.

There’s also talk of a government proposal – as reported by NST – to take over 15 highways, including the North South Expressway (NSE), which is managed by PLUS, for a combined RM43 billion through the issuance of debt paper to the concessionaires.

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Comments

  • Halim saad offered najib RM20 bil for PLUS and was rejected. With guarantee of no toll hike.

    Like or Dislike: Thumb up 15 Thumb down 1
    • Ajibkor on Oct 03, 2019 at 12:29 pm

      So right bro. RM3 B cant even buy my debt ridden , loss making 1Mdb…. foolish lanun RRJ Capital..

      Like or Dislike: Thumb up 10 Thumb down 2
  • john lam on Oct 03, 2019 at 11:23 am

    pity the rakyat that the toll collection will continue for another 20 years until 2058!!!

    Like or Dislike: Thumb up 4 Thumb down 1
  • Gabriel on Oct 03, 2019 at 11:24 am

    Selling Malaysia’s asset to foreign company is the way to go. I support this Malaysia Baru.
    I hope PH government will agree to sell it.

    Like or Dislike: Thumb up 10 Thumb down 10
  • Cucu punya cucu pun masih bayar on Oct 03, 2019 at 11:29 am

    This is just an another political dramas in every 10-15 years, the contracts just get extended another 20 years every time, plus promises says you are going to pay less, which the rates are back to 3 or 5 years ago… This time attracting the so called overseas investment some more…

    Like or Dislike: Thumb up 4 Thumb down 1
  • lilytan on Oct 03, 2019 at 12:10 pm

    Sell the golden goose

    Like or Dislike: Thumb up 0 Thumb down 1
  • Ah Chong on Oct 03, 2019 at 1:26 pm

    Does this mean our EPF will have less dividend moving forward?

    Like or Dislike: Thumb up 9 Thumb down 0
    • lilytan on Oct 03, 2019 at 5:28 pm

      Tabung Haji and LTAT already gave paltry dividend. Guess whose next?

      Like or Dislike: Thumb up 2 Thumb down 1
  • Cash cow on Oct 03, 2019 at 2:03 pm

    I’ve always suspected that PLUS highway is a cash cow with guaranteed, overflowing profits every year. The number of bids to buy-over only confirms this.
    Why not the government uses KWSP/EPF to buy 100% stake in PLUS which will guarantee higher dividend rates for all contributors. I’m sure the maintenance cost will be fully covered even if the toll rates are reduced by half.

    Like or Dislike: Thumb up 10 Thumb down 0
  • pakat on Oct 03, 2019 at 2:36 pm

    you reduce 20% first, then subsequently increase back step by step. its a SQUARE ONE. Also, netizen, please skin peel this company, see whether we can catch some crony ghosts behind…

    Like or Dislike: Thumb up 4 Thumb down 1
  • vVivi Zurianti on Oct 03, 2019 at 5:03 pm

    these ppl cannot be trusted with their sweet-talk, so-good-deal, etc.

    Sadly, malaysian always have short term-memory and easy-meat to cronies business.

    Like or Dislike: Thumb up 2 Thumb down 1
  • Dong gor on Oct 03, 2019 at 7:56 pm

    Read the agreement properly lo this time. Later come tell us the contract has no hikes but also no maintenance. Wuahaha

    Like or Dislike: Thumb up 0 Thumb down 1
  • Chris on Oct 04, 2019 at 7:45 am

    No extensions! Omg…

    Like or Dislike: Thumb up 0 Thumb down 0
  • Kay Ohhh on Oct 04, 2019 at 1:22 pm

    TH dividend already tahi, now epf dividend also tahi after this

    Like or Dislike: Thumb up 2 Thumb down 0
  • Not Toyota Fan on Oct 04, 2019 at 3:28 pm

    What happened to PH bragging about buying these concessionaire and then remove the tolls?

    Cakap Syiok saja. Cakap tak serupa bikin. 2×5 with Bee-End.

    Like or Dislike: Thumb up 0 Thumb down 0
  • SHAHARUDIN BIN HASHIM on Oct 05, 2019 at 7:50 am

    Suddendly bid for foreigner company??????….
    Whats the hack?
    Whats the need?
    Just sell to EPF 100% sure got more than enough money to buy it. Somemore profit later comeback Malaysian.
    I really not understand you goverment intent to do that, in whatever reason…the profitable company like PLUS should remain under Malaysian unless you hv hidden agenda…..!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

    Like or Dislike: Thumb up 0 Thumb down 0
 

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