EDL sale will give MRCB ‘sound footing, financially’

KUALA LUMPUR (Oct 18): Malaysian Resources Corp Bhd (MRCB) will use the proceeds from the disposal of its stake in MRCB Lingkaran Selatan Sdn Bhd, the concession holder of the Eastern Dispersal Link (EDL) Expressway in Johor, to settle debts and fund future property developments.

A source close to the matter told The Edge Financial Daily that MRCB is in the midst of “reviewing and validating” the two proposals submitted by PLUS Malaysia Bhd and a client of ZJ Advisory Sdn Bhd — a process that could take about four to six months.

“We are now going through the process of reviewing and validating both offers. This is a related-party deal which means we would need to get consent from our independent advisers and shareholders,” the source said yesterday.

Last Friday, MRCB announced that it had received indications of interest from PLUS and ZJ Advisory’s client to acquire its interest in the EDL concessionaire.

According to the source, MRCB is keen to sell its interest as it would give the group a “sound footing, financially”.

“We will use all proceeds [from the disposal] to settle our debts and fund future construction projects. There are a few land banks which we are targeting, although we are unable to reveal any more information on this,” the source said.

The source added that the disposal of the expressway would lower MRCB’s gearing from the current 1.3 to about 0.7 by mid-2017.

Notwithstanding this, MRCB is unfazed by the current slowdown in the economy and the property sector, as it is optimistic about its outlook given the healthy performance of its business.

“Our projects are well locked-in and the number of tenants of our new properties is increasing. We should not have any problem for the next two years at least. We are comfortable,” the source said.

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This article first appeared in The Edge Financial Daily, on Oct 18, 2016. Subscribe to The Edge Financial Daily here.