Here’s the truth about PLUS’ debt

In reference to a recent media report on private firms intending to take over PLUS Malaysia Berhad (PLUS), the management wishes to clarify the misleading and inaccurate claims about the company’s debt and operational efficiency.

These misleading and inaccurate claims are as follows:

  1. “Since the takeover, the debts have risen almost 10 times the tender price of RM3.4 billion in 1988. Only RM700 million (of debt) has been paid. Where did the money (cash from annual revenue) go?”
  2. “When he (Halim Saad) left the highway operation nine years ago, PLUS’ borrowings stood at RM6 billion, five times less than its current debt.
  3. “Private Companies can run PLUS more efficiently”

When Syarikat Danasaham Sdn Bhd (which subsequently transferred all assets to Khazanah Nasional Berhad) took over UEM Group Berhad (“UEMG”) from Renong Berhad and privatised UEMG in 2001, PLUS was a wholly-owned subsidiary of UEMG and was already a debt-ridden company with a total borrowing of RM16.5 billion on its balance sheet as at Dec 31 2001. This amount is almost three times higher than the figure quoted in Halim Saad’s statement.

Subsequently, UEMG under the new shareholder, Danasaham, successfully listed PLUS shares on the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia) through an IPO exercise in 2002 at the value of RM12.75 billion, then only pared down PLUS’ debt substantially to RM7.2 billion.

PLUS was listed on Bursa Malaysia for nine years and during this period, PLUS grew its business through various acquisitions of brownfield highways together with their borrowings, which included Elite and Linkedua.

PLUS was subsequently taken private in November 2011 under the joint-offer from UEMG and the Employees Provident Fund Board (EPF), based on the approved valuation of RM23 billion, to address the conflicting pressures between the foreign/institutional investors and various stakeholders arising from the toll rate increase issue. In order to fund this privatisation cost of RM23 billion as well as the refinancing of PLUS borrowings totalling RM11.5 billion, PLUS had to gear up by issuing an enlarged Islamic Sukuk of RM30.6 billion in January 2012.

The Board of PLUS Malaysia Berhad realised the growing competition that PLUS was facing against the other emerging highways, the public transport system and disruptions in digital technology. Hence, the Board took the decision to recruit the best talents and adopted a new business plan which included optimising non-toll revenue and operational cost efficiency within the organisation.

The company continues to drive investment in the latest technologies towards the development of smart highways for the benefit of all customers.

PLUS is considered not only the largest and most experienced toll concessionaire in South East Asia but also among the top 10 toll highway companies in the world, and always benchmarks itself against the yardstick of operational and cost excellence. According to a recent benchmarking report, PLUS excelled in Operations as well as Mechanical & Electrical maintenance and performed better than its domestic peers.

As part of congestion management of the highway, PLUS works closely with the government authorities in line with their framework and regulations to facilitate RFID tag detection along the highway which is a pre-requisite prior to the introduction of the multi-lane free-flow traffic system with no toll plazas in the future.

The dynamic tolling system which is being developed by PLUS will reduce bottlenecks during peak hours. Through this latest technology, real-time information on road and weather conditions ahead will be made available to all highway customers.

The overall safety of highway customers and PLUS personnel will also be further enhanced with the deployment of mechanised roadwork vehicles.

PLUS manages over 1,100 kilometres of highways with 8,303 slopes, 2 tunnels (i.e. Meru & Menora Tunnels), 741 bridges (including major bridges like the 1st Penang Bridge, JB causeway, Linkedua) and 6,187 drainage /culverts, all of which need constant maintenance and PLUS undertakes more than 10,000 inspections annually. Furthermore, these assets are all built over a wide variety of conditions from peat/swampy land to undulating terrain.

Apart from that, we continue to rejuvenate and enhance our 29 Rest and Services Areas as well as 50 laybys, 4 overhead bridge restaurants (OBR), 114 interchanges, 104 toll plazas and 1212 toll lanes, of which the cost of maintenance work and upgrading projects are fully borne by PLUS.

PLUS R&R areas in selected locations are being refurbished into contemporary and family-friendly places to meet the demands of today’s highway customers. Our business partners i.e. stall operators benefit directly from all these improvements as it enlarges their customer footprint.

Our aim is to provide a safe and enjoyable experience in keeping with an increasingly affluent Malaysian society and putting PLUS at the forefront of Malaysia’s modern infrastructure serving new townships and industrial areas along the highway corridors. We are committed to fulfilling our social obligations under the Shared Prosperity Vision as we strongly believe that being a good responsible corporate citizen is good for business.

It is also worth noting that PLUS has not increased its toll rates for 14 years since 2005 and the current toll rate per kilometre of the NSE and ELITE are one of the lowest in the country.

The profits received by PLUS is distributed to its shareholders, EPF and Khazanah Nasional Berhad, the sovereign wealth fund of Malaysia (via its wholly-owned subsidiary, UEM Group) to benefit EPF contributors (14 million members) i.e. the “rakyat” and the “government”.

The new management is powering change by using technology and digitisation to disrupt the barriers that once stood in the way of doing things better in PLUS. These initiatives will enhance the safety of motorists and employee productivity, which invariably will reduce cost.

We remain committed in our relentless efforts to provide our customers a safe, comfortable and enjoyable highway experience.

Azman Ismail is the managing director of PLUS Malaysia Berhad.

The views expressed are those of the writer and do not necessarily reflect those of FMT.