RAM Ratings keeping close tabs on EDL developments

PETALING JAYA: RAM Ratings is closely monitoring developments surrounding the Eastern Dispersal Link (EDL) for impact on MRCB Southern Link Bhd’s RM845 million senior sukuk, which was the funding conduit for the highway.

This follows the recent announcement by Prime Minister Datuk Seri Najib Abdul Razak during the tabling of Budget 2018, that toll for EDL would be abolished effective Jan 1, 2018. Details of how it will be affected however have not been finalised.

Treasury Secretary-General Tan Sri Mohd Irwan Serigar Abdullah when met yesterday, said the government is in discussions on the structure of the takeover of the EDL.

“We will see how the takeover process can be implemented. All the discussions are ongoing,” he told reporters on the sidelines of the “2018 Post-Budget Dialogue” when asked if the government will take over EDL debt on Malaysian Resources Corp Bhd’s (MRCB) balance sheet.

RAM has a BB3 rating and negative outlook on the sukuk, which reflects the continued low safety of payment of MRCB Southern Link’s financial obligations, and its concerns over a possible cash shortfall that the company is expected to face in repaying its dues in June 2018, which coincides with the commencement of principal repayments of the Senior Sukuk.

RAM said in a statement, it will assess MRCB Southern Link’s ability to meet its obligations in respect of the sukuk in light of the proposed abolition, and hence the rating impact, when details of the move become available.

The first full private sector funded highway EDL runs on a 34-year concession, which was awarded to MRCB in 2007. MRCB considers the EDL concession a non-core asset and has been looking to dispose of it to relieve a debt burden which makes up about 36% of its total leverage.

MRCB’s share price was up 10 sen to close at RM1.13 yesterday, with some 47.3 million shares changing hands.