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Gov't completes takeover of two LRT operators
Published:  Nov 30, 2001 5:58 AM
Updated: Jan 29, 2008 10:21 AM

(AFP) - The government today completed the takeover of two debt-ridden light railway companies in its largest ever restructuring exercise, dealers said.

The government issued four tranches of bonds totalling RM5.467 billion with maturities of five, seven, 10 and 15 years in a debt conversion scheme to settle the two companies' debts, bond dealers said.

The serial bonds will be issued to creditors of Projek Usahasama Transit Ringan Automatik (Putra) and Sistem Transit Aliran Ringan (Star) in the debt replacement, they added.

The deal, made through a special purpose vehicle Syarikat Prasana Negara, would see the government acquiring 80 percent of the assets of both operators, the New Straits Times said.

The railway networks are to be leased back to the private firms to operate.

Putra, which is owned by debt-ridden conglomerate Renong, is the biggest debtor among the two, with total debts amounting to RM4.27 billion, the newspaper said.

The exercise eclipsed the government's RM3.7 billion takeover of United Engineers Malaysia earlier this year.

Dealers told AFX-Asia, an AFP -owned financial news wire, the bonds would not be opened for tender but be placed to some 30 lenders, mostly offshore banks in Labuan island off Borneo.

"The bonds are meant for the replacement of debts. They will be issued to the creditors of Star and Putra and won't be tendered," said a senior dealer with a major local bank.

"If these creditors do not want to hold the bonds, they can sell them in the secondary market."

Major step

The deal was a major step in clearing some RM30 billion worth of restructuring cases under the Corporate Debt Restructuring Committee.

Bankers said the move would also significantly reduce the level of non-performing loans in the banking system as almost all the local banks had extended money to the two operators.

"The exercise's significance is that the two companies' massive debts are settled," Louise Paul, chief executive of participating bank Bayerische Landesbank in Labuan, told the Business Times .

Employees Provident Fund was also believed to be involved in the debt-restructuring exercise, the newspaper said.

The government first announced in December it would take over the debts of the two firms in what it termed a major restructuring of Kuala Lumpur's public transport system.

But it later reviewed the plans amid criticism that it was another "bailout" of favoured companies.

The traffic-clogged city of 1.5 million people has 56 km of light rail, its sole public transport apart from buses.

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