SINGAPORE, June 10 (UPI) -- A week after telecom firm Maxis Communications Bhd launched Malaysia's biggest initial public offering, it was the turn of toll road operator PLUS Expressway Bhd. to tempt investors with a $671 million IPO for a 18.6 percent stake in the company.
The company is 66.3 percent owned by United Engineering Malaysia Bhd, one of the country's largest debtors, which was taken over by the government last September from Renong Bhd, the large industrial conglomerate. At the time the government bought Renong's stake for $395 million and UEM now also owns a controlling 31 percent stake in its former parent.
On Monday, PLUS announced it would offer a total of 174.359 million shares at 67 cents each. According to the IPO prospectus, UEM will also make a non-renounceable offer for the sale of 125.641 million shares to previous shareholders on the basis of one new share for every four held. PLUS has also offered for sale 530 million to 630 million shares to foreign and local institutional investors, the price of which will later be determined. The company expects to list on the main board of the Kuala Lumpur Stock Exchange around July 15.
Prior to the IPO, UEM had redeem and refinance the PLUS bonds issued jointly by UEM and Renong in 1999, of which about $3.6 billion worth remained outstanding. As part of the restructuring, the UEM group raised $789 million in new loans to redeem the PLUS bonds and issued $63 million worth of PLUS shares to investors. PLUS also issued $1.34 billion in new bonds to be paid over a period of 15 years.
PLUS said the entire proceeds of the IPO will go to its controlling shareholder, UEM. The money will help the company write down some of its massive debt.
In the IPO prospectus PLUS indicated it posted a net profit of $494 million in the first quarter, compare with a loss of $2.81 million for the same period last year. The improvement reflected an extraordinary gain of $455 million from the write-back of accrued interest on a government loan following the waiver of interest payment on the loan, PLUS said.
The company operates the longest toll expressway system in Malaysia, including the 500-mile North-South Expressway from Singapore to Thailand. Its concession to operate the expressways expires in 2030.
PLUS expects to incur a net loss of $472 million this year due to a one-off loss of $1.11 billion resulting from the write-off of some of its debt.