MRCB’s net gearing to improve after EDL concession termination

PETALING JAYA: Malaysian Resources Corp Bhd (MRCB) will receive RM1.33 billion from the government for the termination of the Eastern Dispersal Link Expressway (EDL) concession, and expects to see its net gearing improve to 0.28 times from 0.53 times as at Dec 31, 2017 (FY17).

MRCB intends to use the proceeds for the repayment of senior sukuk, junior sukuk and shareholder’s advances, and as general working capital.

MRCB’s sub-subsidiary MRCB Lingkaran Selatan Sdn Bhd entered into a termination and settlement agreement with the government yesterday.

“Based on the audited consolidated financial statements of MRCB group for the FY17 and on the assumption that the concession termination had been effected at the beginning of that financial year, the earnings per share of the MRCB group is expected to increase from 6.56 sen to 7.50 sen as a result of the concession termination,” MRCB said in a stock exchange filing.

Net assets per share is expected to fall to RM1.10 from RM1.11.

To recap, MRCB had planned to dispose of the EDL following the government’s decision to abolish toll collection on the highway from 2018. EDL is the first fullly private sectorfunded highway that ran on a 34-year concession. The concession was awarded to MRCB in 2007.

The concession termination is subject to approval of MRCB shareholders at an EGM to be convened. MRCB has submitted an application to Bursa Malaysia Securities for a waiver from having to obtain shareholders’ approval for the concession termination and the termination agreement and will seek shareholders’ ratification at the EGM instead.

MRCB’s substantial shareholders, namely the Employees Provident Fund Board, Gapurna Sdn Bhd and Lembaga Tabung Haji, which collectively hold at least a 51% stake in MRCB, will vote in favour of the concession termination and termination agreement at the EGM.

Barring unforeseen circumstances, and with all approvals being obtained, the concession termination is expected to be completed by the first quarter of 2019.