Hard to imagine PLUS in private hands, says Khazanah Nasional managing director

: Selling PLUS Bhd to private entities would be a “huge moral hazard”, according to Khazanah Nasional Bhd’s managing director Datuk Shahril Ridza Ridzuan.

“We view PLUS as a strategic asset for the country. It’s an asset which, particularly, I think will be difficult to imagine in private hands, especially if a lot of the offers coming in are basically from private entities which just want to acquire the asset at a cheap price and still ask the government to guarantee them.

“I think that is a huge moral hazard in having private entities to hold such a strategic asset with the backing of government guarantees.

“We are not at liberty at this point in time to discuss what we put forward to the government, I think basically it is in line with the thought that it is a strategic asset and PLUS’ highways should really remain in ownership of the Malaysian people,” he said to the media on the sidelines of the Khazanah Megatrends Forum 2019 today.

During a TV interview over the weekend, Shahril said Khazanah had so far rejected all takeover offers it received from local and foreign private entities for the highway operator.

RRJ Capital, a Malaysian-led Hong Kong-based private equity firm, is reported to be one of the contenders for PLUS, having recently upped its takeover offer to RM3.5 billion.

Khazanah owns 51% of PLUS, while the Employees Provident Fund owns the remaining 49%, following a takeover exercise in 2011, in a transaction valued at RM32 billion.

However, at Parliament House today, Prime Minister Tun Mohamad appeared to contradict Shahril’s words, telling the media that the government will consider all acquisition offers for PLUS from private entities, provided the price is attractive.

“Yes, we can sell. Whatever offer is made on PLUS will be studied by the government to determine whether it is suitable to our needs,” he was quoted as saying.

Meanwhile, Shahril said the group hopes to achieve a profit of RM5 billion for the ending Dec 31, 2019, following its first loss of RM8.65 billion in a decade last year.

“We are doing two things this year: divesting assets and improving our balance sheet. Hopefully we achieve our targets of reducing our debts and posting a profit of about RM5 billion this year,” he said.

Shahril also said the group’s debt target of RM35-40 billion was a medium-term plan for the group which would take place over the next three to five years.

“RM40 billion is what we consider a sustainable level of debt, and we are targeting an asset-to-debt cover about 3 to 3.5 times, as opposed to our current level of just over 2 times so it’s about providing a more sustainable balance sheet for Khazanah for the long term,” he said.

Shahril’s comments followed what Economic Affairs Minister Azmin Ali had said earlier in the day by which the sale of assets by Khazanah would be expected to reduce the group’s debt levels to between RM35 billion and RM40 billion.

Thus far, Khazanah’s debt level has been reduced from RM55 billion to RM47 billion.

“We must ensure that the assets sold generate money as well as new funds for us to reinvest into other assets and make more profits for Khazanah and also to eventually give dividends to the government,” said Azmin.

On the potential sale of Malaysia Airlines, Azmin said he was not able to comment on the potential bidders, but Khazanah would make the relevant announcement once the deal was completed.

Source: The Sun Daily

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