The acquisition of the assets and liabilities of PLUS Expressways Bhd (PEB) by UEM Group Bhd and the Employees Provident Fund (EPF) will pave the way for a better toll deal for users and a saving of RM6.5 billion for the government.

UEM Group and EPF today announced they agreed to revise the terms of the toll concession agreement with the government, under which there will be no toll increases on four expressways until 2015 and government will not make any compensation payment.

UEM Group’s managing director/chief executive officer, Izzaddin Idris, said the four expressways were North-South Expressway (NSE), NSE Central Link (ELITE), Malaysia-Singapore Second Crossing (Linkedua) and the Butterworth-Kulim Expressway (BKE). 

He said starting 2016, the toll rate increases on the four expressways will be fixed at five percent every three years, while that for Penang Bridge will remain as per current charges until the end of the concession period.

Currently, the toll increases are: NSE (10 percent every three years); NSE Central Link (10 percent every three years); Linkedua (25 percent every five years); BKE (15-25 percent every five years); and Penang Bridge (10 percent every five years).

In a media briefing and press conference on the proposed acquisition in Kuala Lumpur today, Izzaddin said PEB will also waive RM2.9 billion in current outstanding compensation balance and the toll freeze until 2015, which will otherwise cost the government RM3.6 billion.

The toll freeze was announced by Prime Minister Najib Abdul Razak last year.

There will be no extension for concession period for NSE and Linkedua which will end in December 2038, he said.

However, the concession period for ELITE, BKE and Penang Bridge will be extended to December 2038.

The current expiry dates are - ELITE (May 31, 2030); BKE (June 27, 2026); and Penang Bridge (Dec 31, 2021).

“We entered into negotiations with the aim to realise four goals - to minimise the toll rate increases and achieve a reasonable toll structure, mitigate the government’s burden on toll compensation, ensure lenders’ interests are protected and avoid any impact to the debt capital markets, all the while ensuring a fair deal for equity stakeholders,” he said.

Deal expected to be completed by Dec 31

He said UEM and EPF expected to complete the acquisition and minority shareholders of PEB to receive their payments by Dec 31 this year.

Once completed, UEM will own 51 percent of the special-purpose vehicle for the acquisition, PLUS Malaysia, while EPF 49 percent.

At the moment, UEM holds 38.5 percent stake in PEB and EPF 12.4 percent.

He confirmed that PEB, the largest the toll operator in the country, will raise funds to refinance existing borrowings of RM11 billion and also “streamlining everything”, adding that details will be announced later.

On a report that PEB would raise around RM33 billion, he said it was no secret as the calculation of the figure was based on the borrowings of PEB of RM11 billion and the outstanding consideration for the acquisition of the assets and liabilities of PEB of RM22.25 billion.

EPF’s head of capital market department, Rohaya Mohammad Yusof, said the fund expected the dividend payout from the investment at 5-6 percent annually throughout the concession tenure. 

She said as a general principle, EPF expected a minimum internal rate of return of 10 percent for its investment, and this was what it expected when entering into the negotiation for acquisition of assets and liabilities of PEB.

“We believe the negotiations with the government have resulted in a fair outcome for all parties.

“The investment is expected to generate a stable and sustainable yield, which fits well into EPF's strategic asset allocation,” she said.

- Bernama