What’s Up? PLUS/MMC Corp

PLUS/MMC Corp

What’s Up? … dated Jan 2011

Sources say MMC Corp Bhd is likely to emerge the third bidder. MMC is still in the running to acquire PLUS. Even before the RM26bil Jelas Ulung Sdn Bhd bid came in, MMC had proposed the idea to the Government.

At this juncture, details such as the acquisition price, source of funding and the business plan for PLUS under this new bid are still sketchy. It is anticipated that the company would reveal the details of its “surprise” offer on 10 Jan 2011. PLUS' independent board members have set a deadline that after 5pm on 10 Jan 2011, the company will not consider any other new offers.

To date (07 Jan 2011), there have been two offers on the table for the acquisition of the assets and liabilities of PLUS, to be put forward to shareholders at an EGM.

The first is a joint offer by UEM Group Bhd and the Employees Provident Fund at RM4.60 per share, which works out to RM23bil; the other is from Jelas Ulung Sdn Bhd at RM26bil or RM5.20 per share.

To recap, before the UEM-EPF and Jelas Ulung offers came in, MMC had made a move to acquire PLUS via the takeover of UEM Group. This was proposed in August 2010 through a consortium. That proposal was presented to the Finance Ministry, but details of the offer were not made public.

Prior to that, in May 2010, Asas Serba Sdn Bhd had put in a bid for PLUS that entailed a proposal to pay RM50bil for 25 toll highways.

The MMC group, with businesses in transport and logistics, energy and utilities as well as engineering and construction, has total gross debt of RM20.4bil as at the third quarter of 2010. On a net basis, MMC's debt level actually stands at RM15.9bil, after considering its cash position of RM4.5bil.

Based on MMC's balance sheet as at the end of September 2010, its gross gearing ratio stood at three times while net gearing ratio was at 2.3 times. At the holding company level, MMC has a debt of RM3.57bil that represents a gearing level of 0.7 times.

The bulk of these borrowings resides in Malakoff Corp Bhd and its ports, and these borrowings are structured such that the obligations are ring-fenced and secured. Most of the borrowings are contained at the subsidiary level, where about 80% of the group debt involves project financing and is related to its concession for independent power producers and ports.

It posted a pre-tax profit of RM733mil for the first nine month of its 2010 financial year ended Dec 31 that reflected an increase of 27% from the same previous period.