D-Day for PLUS
By P Gunasegaram |   |  Featured, Mainstream, Opinion

By P Gunasegaram

TODAY is the day that the Cabinet decides who will eventually own PLUS, the country’s and Southeast Asia’s largest highway concessionaire and among the largest in the world, estimated to be worth RM30 bil to RM40 bil.

But strangely enough, the current shareholders of PLUS, Khazanah Nasional Bhd (51%) and the Employees Provident Fund (EPF), have not so far been engaged by the various bidders (see table below).

The offers for PLUS

Offerer Latest offer  Extension Govt guarantee Toll reduction
Abu Sahid Mohamed RM3.5 bil Yes Yes Yes
RRJ Capital RM3.5 bil Yes Yes Yes
Halim Saad RM5.2 bil Indeterminate Indeterminate Yes
Widad Business Group RM5.3 bil Yes No Yes

Source: News reports

Khazanah managing director Datuk Shahril Ridza Ridzuan said yesterday that from a governance point of view, any decision on the sale of assets had to be done properly through formal engagement with the current shareholders – Khazanah and EPF.

“And that part has never started,” he told reporters on the sidelines of Bank Kerjasama Rakyat Malaysia Bhd’s (Bank Rakyat) Integrity Forum 2020 yesterday, an event that coincidentally PM Tun Dr Mahathir Mohamad also attended. 

Shahril Ridza said that Khazanah and EPF had never put up the assets for sale and there is no bidding process going on.“When we talk about the offers coming in, that is a bit mistaken because there is no bidding process and no bidders per se.

“These are all unsolicited offers which were made to the government rather than to the current shareholders, and we are not engaged in the process of selling the assets,” he said.

The question is what would happen if the Cabinet decides that one of the four in the table gets the Cabinet nod. That would mean that the boards of Khazanah and EPF, as well as their management, would have been completely bypassed, a complete and utter disregard for proper governance. 

Asked what would happen to Khazanah and EPF if the government decides to sell PLUS to a third party, Shahril Ridza said the most important thing is to make sure the value of the assets is protected.

“This is why we did not entertain any of the previous offers because, to be honest, the offers undervalued the assets.”

However, he is happy that the valuation done by the government via an independent investment bank is in line with the current value of PLUS, without disclosing any figure.

“I am very happy to note that, basically, we think that the valuation has been validated now by the independent bankers, both from the part of our side and the government side,” he said.

But there are complications because bidders are looking for extensions to the concession of 20 years, which is longer than the current period to the expiry of the concession, which is 18 years.

Any such extension of the concession period will increase the value of the concession by RM30 bil to RM40 bil, and this time there will be no debts to take into account. Thus, a value of around RM5 bil for PLUS seems rather paltry.

The problem is that there is no transparency in any of these offers and it would be far better if a decision is made only after all relevant information is disclosed to the public via a prospectus, as is the norm with listed companies.

Only then can the public, the ultimate beneficial holders of both PLUS through Khazanah and EPF, assess the offers. It is vital that proper governance measures are adhered to in the PLUS sale, and that Khazanah and EPF are brought into the decision-making process.   

On Monday, Finance Minister Lim Guan Eng said the Cabinet would discuss the proposed takeover of PLUS and Gamuda Bhd’s four highways in the Klang Valley at its meeting tomorrow, with an announcement on the matter to be made after the Cabinet meeting. - Jan 15, 2020

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