PLUS shareholders walk out of EGM

Putrajaya appeared bent on addressing toll concessions seen as lop-sided. — file pic

PETALING JAYA, Feb 23 — PLUS Expressways Bhd’s (PEB) minority shareholders have walked out of an extraordinary general meeting this morning, which was to vote on UEM-EPF’s takeover bid after alleged procedural irregularities.

The group told reporters they had walked out in protest after the chairman stopped them from voicing their dissatisfaction over the RM23 billion deal.

The decision to privatise PLUS was made by Prime Minister Datuk Seri Najib Razak when he unveiled Budget 2011 last year, during which he also announced a five-year toll rate freeze at four PLUS-owned highways.

The government’s move is to pave the way for a reduction in toll rates and this may consequently affect the level of profitability that PLUS used to enjoy in the past.

Industry watchers said the government appeared to be undoing the old economic models, offering no compensation to concessionaires and freezing toll hikes without lengthening of concession periods.

Previously, the government had reimbursed operators in cash and subsequently extended their concession terms in exchange for maintaining their existing toll rates.

Industry watchers added that the previous model was not sustainable in the long run, owing to the tightening of government fiscal policy.

They added that the renegotiation of the concession with PLUS was a trailblazer for the government, which has also started to renegotiate with other toll concessionaires, to ease the burden on motorists.

Last Friday, the toll at the Petaling Jaya Selatan 2 (PJS2) toll plaza along the New Pantai Expressway (NPE) near Kampung Medan in Petaling Jaya, was reduced to RM1 from RM1.60.

Meanwhile, MTD Capital has proposed a toll freeze on two of its highways without compensation. The toll concession on a third highway belonging to MTD will be abolished in May, ahead of expiry in 2018.

With the government bent on redressing toll concessions that are seen as lop-sided, especially to the government and consumers, the question uppermost on the minds of minority shareholders of PLUS is whether the offer price of RM4.60 reflects the fundamentals of the stock.

Numerous analysts and investment houses have urged minority shareholders to “cash-out” as they would be exiting with handsome gains at the offer price of RM4.60.

PLUS announced in October 2010 that it had received a joint offer from major shareholders UEM Group and EPF to acquire all the business undertakings assets and liabilities of the group at a purchase consideration of RM23 billion or RM4.60 per share.

Both parties will then form a special purpose vehicle (SPV) that is to be formed between UEM Group and EPF to facilitate the deal on 51:49 basis.

Thereafter, all the assets and liabilities of PLUS Expressways Bhd, will be transferred to the SPV.

As interested parties in the transactions, Khazanah Nasional, UEM Group and the EPF will not be able to vote on the joint offer as they hold 67.5 per cent of the shares in total.

The deal will pass if the simple majority of the remaining 32.55 per cent of shareholders vote in favour of it.

MORE TO COME