Saturday June 30, 2012
EPMB expects RM100mil revenue contribution from MEX in FY13
By WONG WEI-SHEN
SHAH ALAM: EP Manufacturing Bhd (EPMB) expects its revenue for the financial year ending Dec 31, 2013 (FY13) to be in excess of RM100mil from Maju Expressway (MEX). This is provided that the Government approves the proposed acquisition of the MEX highway by EPMB.
EPMB recorded revenues of RM578mil in FY11, and RM587mil in FY10. “Although we are proposing to buy MEX highway, our core business will remain the same as our present business is sustainable,” executive chairman Hamidon Abdullah said after the company's AGM.
He said EPMB, as an automotive parts manufacturer, would always look to improve its quality and efficiency. “We are a component supplier that provides many items to form a performing parts for safety, structural, and parts in coordination with other performing parts.
“To be able to have a turnover of RM500mil a year on this kind of profile, it suffices to say that we have the people, technology and the infrastructure to move forward,” Hamidon said.
EPMB had on March 16 announced to Bursa Malaysia the proposed acquisition of Maju Expressway Sdn Bhd (MESB) and its business from Bright Focus Sdn Bhd, which is a part of Maju Holdings Sdn Bhd and Ulimas Sdn Bhd for RM1.15bil.
The total consideration of RM1.15bil will be satisfied via issuance of 38.46 million new EPMB shares at RM1.30 per share, issuance of RM100mil redeemable unsecured loan stocks, and RM1bil in cash. In addition to that amount, EPMB will assume MESB's debt, totalling RM550mil. Therefore, the total acquisition value stands at RM1.7bil.
“We have made a presentation to our shareholders, and we have their full support for the acquisition. We are all hopeful that it will conclude soon,” Hamidon said.
“We have done all the necessary due diligence. Our advisors have been doing all the legwork. We also have a good rating, and the funding for the acquisition is in place. We understand there are policy issues that need to be looked at, but we are very keen for the deal to happen. We are a willing buyer and Maju Holdings is a willing seller.”
The acquisition will be funded by both internally-generated funds and borrowings. The bulk of the borrowings will come from issuance of new Islamic securities by Epmex Sdn Bhd, a special-purpose vehicle (SPV) set up by EPMB for the acquisition. The nominal value of the Islamic securities stands at RM1.35bil.
Hamidon said the acquisition would take EPMB to a different level.
EPMB's advisors on the proposed acquisition, ZJ Advisory Sdn Bhd director Khong Ho Ming, said the MEX highway like other highways would be cash generating. “We expect a good return from the highway over the remaining concession period of 25 years. Under this period, we will have a stable recurring cash flow,” Khong said.
In terms of the highway's traffic flow projections, EPMB expects future growth to come from areas such as Cyberjaya, Putrajaya and KLIA 2. For the past four years, the traffic flow on the MEX highway had a compounded annual growth rate of 23%. Khong said EPMB expected an average growth in traffic flow of about 5%, over the remaining concession period.
EPMB and the vendors involved in the proposed deal had earlier agreed to extend the period for the fulfilment of the conditions precedent to the acquisition to Aug 14, instead of June 15.
Maju Holdings, which is owned by Tan Sri Abu Sahid Mohamed, has yet to receive the Government's approval for the sale of the highway concession.
If the deal were to go through, Abu Sahid would be left with an indirect interest of 18.2% in MEX through a SPV.
“Once we receive the Government's approval, we will conduct and EGM (extraordinary general meeting) to get our shareholder's approval,” Hamidon said.