MRCB receives RM1.33b settlement for EDL concession termination

KUALA LUMPUR (Nov 24): Malaysian Resources Corp Bhd (MRCB) has received the settlement sum of RM1.33 billion for the termination of the Eastern Dispersal Link (EDL) concession from the government.

In a filing with Bursa Malaysia yesterday, MRCB said its indirect wholly-owned subsidiary MRCB Lingkaran Selatan Sdn Bhd (MLSSB) received the settlement yesterday.

On Nov 12, MRCB announced that pursuant to the termination agreement, the government will pay MLSSB, which MRCB owns via MRCB Prasarana Sdn Bhd, subject to terms and conditions in the termination agreement.

Analysts have estimated that the group’s gearing could be lowered by more than half following the settlement.

On Nov 13, The Edge Financial Daily quoted AmInvestment Bank Research analyst Thong Pak Leng as saying that he expects the compensation received to reduce MRCB’s gearing ratio to 0.22 times from 0.55 times as of Dec 31, 2017.

MLSSB was awarded the EDL concession by the government pursuant to a 34-year concession agreement signed on June 26, 2007, where MLSSB was granted the right to design, construct, manage, operate and maintain the EDL, the administrative office and the ancillary facilities on the EDL, as well as to demand, collect and to retain toll from all vehicles liable to pay toll.

MRCB has said that it plans to allocate RM835.7 million (63.03%) of its proceeds to repay senior sukuk, RM238.52 million (17.99%) for junior sukuk repayment, RM226.58 million (17.09%) for repayment of shareholder’s advances, RM23.13 million (1.74%) for working capital, and the remaining RM1.86 million (0.14%) for estimated expenses related to the concession termination.

Shares of MRCB closed 3 sen or 4.11% lower at 70 sen today for a market capitalisation of RM3.08 billion. Year-to-date, the stock has fallen by 40% from RM1.16 on Jan 2. — theedgemarkets.com

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