Gamuda, MoF seek more time for highway talks

This article first appeared in The Edge Financial Daily, on August 30, 2019.

Baru Bian says the government will seriously consider all proposals after the cabinet makes a decision.

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KUALA LUMPUR: The Malaysian government and Gamuda Bhd are seeking more time to hammer out the details of the proposed acquisition of four toll concessionaires linked to Gamuda for RM6.2 billion, which was first announced in February this year by the finance ministry, sparking speculation that the deal may be in jeopardy.

“On behalf of the board of directors of Gamuda, Hong Leong Investment Bank Bhd wishes to announce that MoF Inc (Minister of Finance Inc) and Kesas Holdings, a 70%-owned subsidiary of Gamuda, have mutually agreed to extend the cut-off date to negotiate and finalise the terms of the definitive agreement from Aug 30, 2019 to Oct 31, 2019 in respect of the Kesas Offer,” Gamuda said in a stock exchange filing yesterday.

“Simultaneously, MoF Inc and each of the following associated companies and joint venture company of Gamuda have also mutually agreed to extend the cut-off date to negotiate and finalise the terms of the respective definitive agreements from Aug 30, 2019 to Oct 31, 2019: (i) Sprint Holdings, a 52% associated company of Gamuda, in respect of the Sprint Offer; (ii) Litrak Holdings, a 43% associated company of Gamuda, in respect of the Litrak Offer; and (iii) Smart Holdings, a 50% joint venture company of Gamuda, in respect of the Smart Offer,” the group added.

Apart from the extensions, Gamuda said all other terms in the offers, which have been accepted by the boards of directors of Gamuda and all the concession-holding companies, continue to be in full force and effect.

The deal is also still subject to the Cabinet’s approval and satisfactory due diligence findings by MoF Inc.

Gamuda previously said its share of proceeds from the divestment of the four highways should work out to RM2.36 billion or 96 sen per share, based on its effective interest in the highways.

Gamuda’s announcement came amid reports that there are now several proposals on the table for the government on the takeover of the country’s tolled highways, including one from sovereign wealth fund Khazanah Nasional Bhd.

“There have been several proposals on toll highways submitted to the government, including from Khazanah. It is up to the government to consider and decide on these proposals,” Khazanah previously said in a statement.

Khazanah’s statement was issued after an English daily reported a day earlier, citing sources, that the government has received a plan to take over 15 highways for RM43 billion, under which Khazanah would set up a special purpose vehicle for the acquisition on the government’s behalf, which it would finance by raising funds via debt papers.

The plan is said to include the acquisition of highways owned by PLUS Malaysia Bhd, including the North-South Expressway (NSE) for RM30.8 billion, and those owned by Projek Lintasan Kota Holdings Sdn Bhd for RM3.1 billion, Gamuda for RM5.6 billion and IJM Corp Bhd for RM2.7 billion.

Meanwhile, Works Minister Baru Bian said as recent as Monday that the goverment is still in the midst of evaluating the merits and feasibility of a proposal by Maju Holdings to take over the NSE.

The minister said the proposal, which involves a significant reduction in toll rates, appeared “attractive”, though the government had yet to decide on it or any other proposals concerning the takeover of tolled highways.

However, he said the ministry will table a report on “The Way Forward for Toll Roads in Malaysia” in the cabinet early next month, which will be based on the final report prepared by an independent consultant in January this year.

“Only after a cabinet decision is made, the government will be able to seriously consider all proposals on taking over tolled highways in the country, including the Maju Holdings-PLUS offer,” he added.

Gamuda shares closed one sen or 0.28% higher at RM3.55 yesterday, bringing it a market capitalisation of RM8.78 billion.