Proposal hangs by a thread as EPF and PNB chafe at being relegated as junior partners to MMC, while the company’s already high debt gearing at 2.6 poses hurdle in raising fresh debt
MMC Bhd’s formal bid to the Ministry of Finance to acquire the entire UEM Group Bhd is hanging by a thread as the Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB) has refused to join the bid as junior partners.
The proposed buyout sees MMC valuing UEM Group at RM15.6 billion and sees it planning to raise RM16 billion, which would include a working capital of RM500 million.
UEM Group’s listed entities include Plus Expressways Bhd, Faber Group Bhd, UEM Land Holdings Bhd and Time Engineering Bhd.
Among the group's business includes UEM Builders, part of its unlisted stable, which is undertaking a large portion of the construction of the second Penang bridge, along with wholly owned subsidiary Penang Bridge Sdn Bhd which holds the concession on the 25 year-old Penang Bridge.
How does MMC intend to acquire PLUS via takeover of UEM
posted Sep 29, 2010 8:02 PM by CT Print
Along with the very very interesting story of how we now know that MMC has been pursuing PLUS is the even more exciting way of how they are going to do it.
This is what TnT has been told:
The Proposal submitted by MMC was done when PLUS's share price was quoted at RM3.80
MMC proposes Special Purpose Vehicle (SPV) to acquire PLUS through the acquisition of UEM at toal cost of RM15.5 Billion
Plans to raise RM16B including working capital of RM500M
Plans to keep toll rates staus quo till the end of concession in 2035
does not intend to seek compensation until the end of concession
Word was that MMC will reduce toll collection by 20% by giving discounts, but such has not been mentioned in the purported proposal
Funding structure tri-party; MMC - 40%, EPF and PNB - 30% each, amount to be raised in market RM11.2B
(This is the clincher) SPV requests corporate tax to be capped at 15% or lower for
PLUS for the entire duration of concession; in addition SPV to be able to utilise all unabsorbed tax losses and capital allowances of other entities within the group
SPV to also seek concessions from government which includes tariff increases after a few years, as well as financial assistance by means of getting government involvement to provide 'below market level funding' or better still the taking over of existing debt
TnT was given a long list of other details, but right now, all that is important is this very interesting proposal by some big wig Taikors.
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