No offer received for 20%-owned Sprint yet

This article first appeared in The Edge Financial Daily, on May 24, 2019.
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KUALA LUMPUR: While Kumpulan Perangsang Selangor Bhd is realigning its focus to the manufacturing sector, it also has investments in companies involved in oil and gas, construction, piping and water chemicals.

It has a 20% stake in 26.5km Western Dispersal Link concession holder, Sistem Penyuraian Trafik KL Barat Sdn Bhd (Sprint), its most interesting asset currently given that there are reports the government is in talks to acquire the highway, including three other Klang Valley highways.

Speaking to The Edge Financial Daily yesterday, KPS chief executive officer Ahmad Fariz Hassan said the group has not received any official offer for its stake in the highway concessionaire. “It is Gamuda (Bhd) (which has a 51.8% in Sprint) that is leading the show,” said Fariz. “We have not been engaged on where [the deal] is at the moment,” he said.

Based on news reports, the government is negotiating with Gamuda to take over the Western Dispersal Link (also known as Sprint highway) — together with Lebuhraya Damansara-Puchong (LDP), Lebuhraya Shah Alam (Kesas) and the Smart Tunnel — with the bids to be concluded by August.

With a net asset of RM199.19 million under Sprint, the carrying amount of KPS’ interest in the associate, including goodwill of RM3.36 million, stood at RM43.19 million at end-2018, or about eight sen per share. It is worth noting that KPS has always delivered special dividends to its shareholders after each divestment.

While reserving comments on the matter as it has not been discussed at board level in the absence of a formal offer, Fariz said any possible divestment of the Sprint stake should not be viewed negatively.

In the good days, KPS, which acquired the 20% stake in Sprint in 2000, could earn up to RM5.9 million from the associate, as seen in financial year 2015 (FY15).

But Sprint has been loss-making in recent years, including in 2013, 2014, 2017 and 2018. In FY18, KPS’ share of loss from the associated company was RM1.4 million.

The investment in Sprint, Fariz reiterated, was done a long time ago. “And [the divestment] could reduce our share of losses on associates,” he said.

KPS shares fell four sen or 3.7% to close at RM1.04, giving it a market capitalisation of RM558.89 million