KUALA LUMPUR: Maju Holdings Sdn Bhd’s proposed RM1.7 billion sale of Maju Expressway (MEX) to EP Manufacturing Bhd (EPMB) appears to be in limbo.

It has emerged that Maju Holdings has yet to obtain the government’s approval to sell the highway concession three months after the proposal was announced.

In an announcement to Bursa Malaysia yesterday, EPMB said the company and the vendors, Bright Focus Bhd and Ulimas Sdn Bhd have mutually agreed to extend the period for the fulfilment of the conditions precedent to the acquisition agreement for a further 60 days to Aug 14 from June 15.  

Bright Focus and Ulimas are units in Maju group, which is controlled by tycoon Tan Sri Abu Sahid Mohamed.

“The extension is mainly because we have not received any response from the government [with regard to the sale of the MEX],” Maju Holdings director Datuk Alan Ong told The Edge Financial Daily.

Ong added that the proposal, a commercial deal, has been “unnecessarily politicised” by certain parties. “We did not expect this to happen,” he noted.

“It will be status quo, [Maju Holdings] will continue to be shareholders... nothing will change,” Ong said when asked what if the government does not approve the sale.

Abu Sahid has a 91% stake in Maju Holdings, which in turn owns 96.8% of MEX. Ulimas holds the remaining portion.

The bone of contention is that Maju Holdings was given RM976.7 million in government funding for the construction of the elevated portion of the highway that runs between Kuala Lumpur and Sepang.

The opposition is against the proposed sale. It said the government should buy back the concession shortly after Maju Holdings announced its plan.

Yesterday, Prime Minister Datuk Seri Najib Razak told the Dewan Rakyat the government had not approved the sale of the MEX Highway concession to EPMB, according to Bernama.

He said several matters pertaining to policies on the highway concession are still being studied by the government. “As such, there is no necessity for the government to study the takeover of the MEX Highway,” Najib said in his written reply to a question from Tony Pua Kiam Wee (DAP-Petaling Jaya Utara).

Defending the proposed sale, Ong said there would not be any highways in the country if not for government funding. “MEX is the cheapest toll road in the country at only 15 sen per km ... certain stretches of the highway are in fact toll free,” he said.

Maju Holdings stands to make a profit of over RM600 million if the proposal goes through.

In an earlier interview with The Edge Financial Daily, Abu Sahid said the cost accumulated to develop MEX had surpassed the amount of the grant.

The entrepreneur said RM1.65 billion had been spent to construct and develop the highway. He added that over RM250 million in debt was assumed by Maju Holdings when it took over the project in 1997. The project was completed over 10 years.

The grant was provided to ensure that lower toll rates could be charged, as MEX was relieved of the higher cost of building it. Abu Sahid said the toll rate of 15 sen per kilometre for MEX stands as one of the lowest in the country. He added that the toll rate was revised after five years, compared with the period of three years for other highways.

If the deal were to go through, Abu Sahid would be left with an indirect interest of 18.2% in MEX through a special purpose vehicle.

This article appeared in The Edge Financial Daily, June 15, 2012.