Fri. Oct 18th, 2019

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Maju offers 36% toll drop in revised PLUS takeover

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Maju offers 36% toll drop in revised PLUS takeover

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Maju Holdings is offering a reduction in tolls between 25% to 36% under an amended proposal to the Malaysian government for the takeover of PLUS, The Star reported. The company plans to bear in full the shortfall from the proposed toll reduction and it is not seeking financial compensation from the government for this, it said in a statement.

“The government currently owes PLUS approximately RM2.7 billion in toll compensation and if Maju Holdings takes over PLUS, we are pleased to inform that we will no longer hold the government responsible for these debts,” the company said, adding that it would absorb the compensation sum instead.

“With this latest offer that we have submitted to the government, existing shareholders of PLUS will benefit from an estimated total equity Internal Rate of Return of approximately 16%. This represents a return that far surpasses the cost of equity for a majority of other toll road concessions, both globally as well as across Southeast Asia,” the statement continued.

Maju stated that it is also committed, as part of its proposal, to invest about RM5.3 billion for various ‘much needed enhancements’ including the lighting up of the entire stretch of the highway, pointing out that its operational track record in managing toll roads speaks for itself.

“We have successfully operated the MEX highway in a highly cost effective manner compared with PLUS toll roads that should benefit from economies of scale. In fact, we have one of the lowest costs per kilometre in the country. As such, we are confident we will be able to reduce maintenance costs for PLUS,” it said.

Maju also reiterated that its enterprise value to purchase PLUS including debt outstanding to bond holders amount to RM34.9 billion. “This purchase consideration is a reflection of the true and fair value of this company and its assets, taking into consideration our intention to provide Malaysian road users with tangible discounts,” it said.

Malaysian-led, Hong Kong-based private equity firm RRJ Capital made a RM3 billion bid earlier this month for the purchase of highway concessionaire PLUS Malaysia, followed by a response from Khazanah Nasional stating that all takover offers had been rejected. Prime Minister Tun Dr Mahathir Mohamad revealed thereafter that the government is willing to review any bids for the purchase of PLUS Malaysia.

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