This article first appeared in The Edge Financial Daily on November 1, 2019

KUALA LUMPUR: PLUS Malaysia Bhd said yesterday it was already a debt-ridden company when Syarikat Danasaham Sdn Bhd took over UEM Group Bhd (UEMG) from Renong Bhd and subsequently privatised UEMG in 2001.

In a statement, PLUS managing director (MD) Datuk Azman Ismail said PLUS, which was a wholly-owned subsidiary of UEMG then, had total borrowings of RM16.5 billion on its balance sheet as at Dec 31, 2001.

“This amount is almost three times higher than the figure quoted in Tan Sri Halim Saad’s statement,” Azman said. Halim is Renong’s former executive chairman.

“Subsequently, UEMG under the new shareholder, Danasaham, successfully listed PLUS shares on the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia) through an IPO (initial public offering) exercise in 2002 at the value of RM12.75 billion, then only pared down PLUS’ debt substantially to RM7.2 billion.

“PLUS was listed on Bursa Malaysia for nine years and during this period, PLUS grew its business through various acquisitions of brown field highways together with their borrowings, which included ELITE and Linkedua,” Azman said.

He said PLUS was subsequently privatised in November 2011 under a joint offer from UEMG and the Employees Provident Fund, based on the approved valuation of RM23 billion to address conflicting pressures between the foreign/institutional investors and various stakeholders due to the highway toll rate increase issue.

In order to fund PLUS’ RM23 billion privatisation and refinance its borrowings of RM11.5 billion then, PLUS had to gear up by issuing an Islamic sukuk of RM30.6 billion in January 2012, Azman said.

He said PLUS’ statement aims to clarify misleading and inaccurate claims on the company’s debt and operational efficiency as indicated in a recent media report on private firms intending to take over PLUS.

The misleading and inaccurate claims were reproduced as follows in PLUS’ statement:

“Since the takeover, the debts have risen almost 10 times the tender price of RM3.4 billion in 1988. Only RM700 million [of debt] has been paid. Where did the money (cash from annual revenue) go?”

“When he (Tan Sri Halim Saad) left the highway operation nine years ago, PLUS’ borrowings stood at RM6 billion, five times less than its current debt.

“Private companies can run PLUS more efficiently.”

According to Azman, the PLUS board realises the growing competition that PLUS is facing from other highways, public transport systems and disruptions in digital technology.

“Hence, the board took the decision to recruit the best talents and adopted a new business plan which includes optimising non-toll revenue and operation cost efficiency within the organisation. It is also worth noting that PLUS has not increased its toll rates for 14 years since 2005 and the current toll rate per kilometre of the NSE (North-South Expressway) and ELITE are one of the lowest in the country.

“As part of congestion management of the highway, PLUS works closely with the government authorities in line with their framework and regulations to facilitate RFID (radio-frequency identification) tag detection along the highway which is a pre-requisite prior to introduction of multi-lane free flow traffic system with no toll plazas in the future.

“The dynamic tolling system which is being developed by PLUS will reduce bottlenecks during peak hours. Through this latest technology, real-time information on road and weather conditions ahead will be made available to all highway customers. The overall safety of highway customers and PLUS personnel are also further enhanced with the deployment of mechanised roadwork vehicles,” Azman said.