MCA : Government to buy back PLUS

MCA wants government to take back PLUS
@ www.theedgemalaysia.com
Written by Nadia S Hassan
Wednesday, 01 April 2009 00:25

KUALA LUMPUR: MCA will urge the government to privatise toll concessionaire PLUS Expressways Bhd as the move will prove beneficial for the people, a spokesman said.At a briefing yesterday, MCA central committee member Wong Nai Chee said it could be done through the government's investment arm Khazanah Nasional Bhd, which holds 63.88% of PLUS (inclusive of shares held under UEM Group Bhd), according to the latter's annual report.

"Assuming a share price of RM3.50 to RM4 per share offered for the acquisition of the remaining shares not owned by the government, the total acquisition price is between RM4.55 billion and RM5.2 billion," said Wong.

He said the MCA would bring up its proposal at the upcoming monthly Barisan Nasional (BN) management meeting. MCA would also look at raising a dialogue with the Ministry of Works on the matter. Wong said the government had an effective interest of 74% in PLUS through Khazanah and the Employees Provident Fund (EPF) Board (which holds 9.59% stake in PLUS as at April 30, 2008), leaving another 26% in the market."

The proposed offer price takes into account not only the historical movements of PLUS' share price, but also the company's fundamentals. The move would also ensure that the company would become more sociably responsible, and not just have profitability in mind," said Wong.

His calculation implies that Khazanah does not buy out the EPF. Between 2003 and 2008, the government paid PLUS some RM2.8 billion in compensation.A back of the envelope calculation showed that the acquisition cost mentioned indicated a potential acquisition price of between RM3.39 and RM3.92 per share, or at least 15% premium to PLUS' prevailing market capitalisation of RM14.75 billion. PLUS closed two sen lower at RM2.94 yesterday. Wong added that making PLUS 100% government-owned would not prove a burden as the company was profitable. "PLUS has been generating a profit of RM400 million to RM600 million yearly from the financial years 2004 to 2007, even if the gross compensation from the government for not increasing the toll is excluded."

"In terms of profit after tax margin inclusive of government compensation, the PLUS business yields a profit margin of above 50% from 2004 to 2008," Wong said."The cash flow generated from operations excluding any receipt from government compensation for not increasing the toll is RM1.1 billion to RM1.4 billion yearly from 2004 to 2007. "This clearly shows that if PLUS is taken over, the possibility of waiving toll increase can be carried out both financially or legally. It would also overcome the problem of minority rights in the future," said Wong.