The Penang government, as owner of the project, is said to be open to the idea of new investors as it will boost its viability in the eyes of financiers.
A source told FMT that Consortium Zenith Construction Sdn Bhd (CZC) would have its key shareholding structure changed to “remove persons with liabilities”, with prior approval from the Penang government.
“Restructuring is one of the strategies being considered so that the project can be delivered. However, the new investors must first show the state they are capable of delivering the project.
“With the current issues concerning the project and its liabilities posed by its proponents, its image needs to be rescued by a credible investor,” the source said.
Zenith Construction Sdn Bhd (ZCSB) has a controlling stake in CZC. In turn, ZCSB is held by Vista Lestari Development Sdn Bhd whose substantial stakeholder is Zarul Ahmad Mohd Zulkifli. He is currently senior executive director of CZC.
CZC’s losses after tax are at RM45 million and revenue was recorded at RM21.6 million as at Oct 12, a Companies Commission of Malaysia search showed.
Another source said CZC’s restructuring would likely take place to increase its chances of funding by banks, as lenders were not too keen to fund the project due to recent probes and cases by the Malaysian Anti-Corruption Commission (MACC).
“No financial institution would want to fund the project unless there is a change in shareholding. In the spirit of getting this project off the ground, this has to happen,” the source said.
The tunnel and roads project gained intense scrutiny in the past few months as part of a renewed graft probe by the MACC, the second time since January 2018. A bribery case related to the project is currently ongoing in court.
However, in the same year, after the 14th general election, MACC had written to the chief minister twice clearing CZC and its key person, Zarul, of any impropriety.
In an email to FMT, CZC confirmed it was in the midst of an internal restructuring.
“This is so that we can deliver the best for the state government relating to our three major highways and the undersea tunnel. We will soon present to the state our restructuring plans and a way forward for us to deliver our contract efficiently,” the email read.
In response, Penang Chief Minister Chow Kon Yeow said a restructuring plan was up to the company to carry out.
“If there are any proposals that can strengthen the project and ensure timely delivery, the state will consider it as long as it is within what is contractually allowed,” he told FMT.
The undersea tunnel and roads project was mooted by the Penang government to alleviate traffic on the first bridge and to cut down traffic at other congested corridors on the island.
The 7.2km undersea tunnel will be built from George Town to Butterworth if feasibility studies come back positive.
Besides the tunnel, three bypass roads are to be built: Air Itam to the Tun Dr Lim Chong Eu Expressway (5.7km); Tanjung Bungah to Teluk Bahang (10.53km); and Gurney Drive to Tun Dr Lim Chong Eu Expressway (4.1km).