This article first appeared in The Edge Malaysia Weekly on January 13, 2020 - January 19, 2020

MOST bidders for PLUS Malaysia Bhd’s assets have resubmitted their proposals with better offers to the Works Ministry, say industry sources.

“Two investment banks have been appointed to assist in evaluating the proposals. The resubmissions have been done and the Cabinet is studying them. Three of four proposals from private entities were presented recently. A decision is expected this week,” says a source.

Another source says, “Most bidders had been asked to consider revising their previous proposals based on factors such as no government guarantee, a minimum discount rate of 18% and concession extension of no more than 20 years.”

It is unclear what were pitched in the revised proposals.

There had been much anticipation of a decision last week on which party will bag the PLUS assets.

There have been four proposals from private entities — Maju Holdings Sdn Bhd, which is controlled by Tan Sri Abu Sahid Mohamed; private equity fund RRJ Capital, which is led by Malaysian brothers Richard and Charles Ong; Tan Sri Muhammad Ikmal Opat Abdullah of Widad Business Group Sdn Bhd; and a joint offer by businessmen Tan Sri Halim Saad and Datuk Wong Gian Kui. There was also talk of a government plan to keep the PLUS assets.

Last month, The Edge reported that Halim and Wong had upped their initial RM5.2 billion offer. While details are scarce, The Edge has learnt that Halim’s offer does not require an extension to PLUS’ concession, which expires in 2038, and is for the entire equity interest in PLUS — the 51% and 49% stakes owned by Khazanah Nasional Bhd and the Employees Provident Fund (EPF) respectively.

Halim had, last October, put in a bid of RM5.2 billion for 51% of PLUS and offered a 25% discount on existing toll charges.

Also in October, Widad Business Group revised its offer to RM5.3 billion cash from RM3 billion previously for the entire stake in PLUS, buying out Khazanah and the EPF. In addition to the cash consideration, it also offered a waiver of RM3.04 billion on debt owed by the government as a result of toll increase compensation and debt assumption of RM30 billion, bringing the total enterprise value of the offer to RM38.34 billion.

The group also sought a 20-year extension to the concession and offered discounts of between 25% and 40% on tolls.

RRJ Capital has offered RM3.5 billion cash to buy out PLUS and its liabilities.

The international firm looks to offer toll discounts of up to 30% based on the price tags of new cars and demolish toll booths to ease traffic congestion.

RRJ Capital has said it is willing to form a 50:50 partnership with government institutional funds or private companies — such as Permodalan Nasional Bhd, Kumpulan Wang Persaraan (Diperbadankan) and the EPF — to own and manage PLUS.

Maju Holdings’ bid has an enterprise value of RM34.9 billion, including debt assumption and toll reductions of as much as 25% to 36%, depending on the tenure of the extension of PLUS’ concession. It also offered to absorb RM2.7 billion in compensation owed by the government.

Datuk A Kadir Jasin, special adviser to Prime Minister Tun Dr Mahathir Mohamad on media and communications, said in an Oct 18 Facebook post that those keen on buying PLUS should prove their seriousness and financial standing by depositing RM500 million with the government.

On Oct 13, Finance Minister Lim Guan Eng revealed to The Edge Financial Daily that the government was weighing the possibility of taking over PLUS as Khazanah had submitted a proposal to sell the company to it. The Edge then learnt later on tht the government was considering paying up to RM7.5 billion for PLUS.

“Potential savings from this can come up to RM29 billion as the government will not have to pay compensation following this because it owns the toll roads,” said a source.

Opinions in the government have been split when it comes to owning the highways.

Some are of the view that the government should not be in business while others think private companies should not own national strategic assets.

Interestingly, the government’s proposal to take over Gamuda Bhd’s four highways is the opposite of its proposal to sell PLUS. The takeover deadline has been extended to Feb 28 from Dec 31 last year.

While views are mixed on the ownership of highways, what is clear is that the finances of PLUS are not great. It posted an after-tax loss of RM93.53 million on revenue of RM3.83 billion in its financial year ended Dec 31, 2018.

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