Published August 19, 2009

Proposal submitted to take over Plus Expressways

Privatisation plan by state-owned firm's former execs said to include toll-rate cut

By S JAYASANKARAN
IN KUALA LUMPUR
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A PROPOSAL to take over Plus Expressways from the state by former executives of the listed highway concessionaire has been submitted for consideration to the country's powerful Economic Planning Unit which oversees privatisations.

According to executives familiar with the matter, the senior executives include Ibrahim Bidin who used to be chief executive of Plus over five years ago.

Mr Ibrahim was also a key lieutenant of Halim Saad, the former owner of the Renong conglomerate, the previous owner of Plus until the government took over all the assets in late 2001.

Mr Halim's name, however, does not surface in the proposal although the market speculation is that he could be linked to the offer. But the tycoon has told some analysts that he isn't involved.

No details of the offer were immediately available but the executives said that if the proposal was accepted, the new owners of Plus were prepared to cut toll rates by at least 20 per cent. It seems likely, however, that they would also ask for an extension of the concession period.

It isn't clear if the government would agree to Plus's privatisation: it is the crown jewel in the United Engineers conglomerate - the former Renong group - with the strongest cash flows.



According to the executives, however, it could form part of a new plan where the government would divest some of the assets of government linked companies like United Engineers and Sime Darby to private hands.

It also isn't clear how the deal's promoters plan to fund it. The firm, which principally operates a highway traversing the length of Peninsular Malaysia, made a net profit of RM1.1 billion (S$451 million) on revenues of almost RM3 billion.

It is 64 per cent owned by United Engineers which is itself wholly owned by Khazanah Nasional, the investment agency of the federal government. At present market values, that 64 per cent is worth RM10.5 billion.

The North-South Highway was completed in the 1990s by Mr Halim's Renong group. The tycoon leveraged the tolled road into a bewildering slew of businesses from telecommunications and banking to construction and infrastructure.

Indeed, Mr Halim, now 55, helped create modern Malaysia. Renong, which at its peak had assets of over RM40 billion, built highways, sport stadiums, bridges and mass rapid transit systems. But the group also racked up debt of over RM20 billion which left it vulnerable to the Asian financial crisis.

In late 2001, after Mr Halim had unsuccessfully tried out various restructuring schemes, Kuala Lumpur lost patience and effectively nationalised Renong by taking over an affiliate company United Engineers.

Mr Halim stepped down from the board and has since adopted a low profile although he continues to run businesses in Malaysia and abroad.