Chan (KEURO) offloads stake to MWE (MPHB)

by **Cals** Sat 13 Jul 2013, 11:47

Published: Saturday July 13, 2013 MYT 12:00:00 AM
Updated: Saturday July 13, 2013 MYT 11:14:51 AM
Chan offloads stake to MWE
[b style="margin: 0px; padding: 0px; border: none;"]BY YVONNE TAN [/b][b style="margin: 0px; padding: 0px; border: none;"]AND LEONG HUNG YEE[/b]
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Chan Ah Chye resigned from his positions as KEur o pr esiden t and CEO in April last year .
PETALING JAYA: MWE Holdings Bhd, a company controlled by Tan Sri Surin Upatkoon, has emerged as the buyer of Tan Sri Chan Ah Chye’s block of shares in concessionaireKumpulan Europlus Bhd (KEuro).
MWE has proposed to buy 22.15% of Chan’s 26.61% stake in KEuro for RM155.79mil cash, or RM1.35 per share, according to an announcement to Bursa Malaysia.
Surin, who also controls MPHB Capital Bhd, owns a 32.62% indirect stake in MWE, which has businesses covering garments, electronics, a golf and country club, plantations and property.
The proposed deal requires approval from MWE’s shareholders.
Chan’s block of shares has been rumoured to be up for sale since conglomerate IJM Corp Bhd emerged in KEuro in 2005.
Prior to this acquisition proposal, MWE had already acquired 26 million shares or 4.99% in KEuro at RM1.14 per share for a total of RM29.64mil via direct business transactions. Upon completion, MWE will be the single-largest shareholder in KEuro with a 27.14% stake.
MWE intends to finance the acquisition through a combination of internal funds and bank borrowings.
Chan was the former president and chief executive of KEuro.
He stepped down from the positions in April last year, paving the way for a revamp of the board and a new management team.
KEuro was in the limelight earlier this week when it said that it would be raising funds to pay for its portion of the capital needed to build the 233-km West Coast Expressway (WCE) project.
According to sources, KEuro is looking to raise at least RM3bil in a series of fund-raising activities to fund the highway that would link Banting, Selangor, to Taiping, Perak.
As part of this, a source said KEuro planned to raise RM1.2bil from equity and another RM2.2bil to RM2.4bil from debt papers.
KEuro has already secured an RM2.24bil government support loan at an interest rate of 4% per year and an interest subsidy of up to 3% from commercial loans for 22 years.
“The exercise (equity fund raising) is imminent. There’ll be a rights issue involved,” the source said, adding that the exercise had so far been “going smoothly”.
As for the debt papers, he said bondholders should “find comfort” in that the Government was also involved in the project.
According to analysts, the cost of a coastal highway such as that of WCE was relatively higher than a “normal” highway, given the different compositions required.
“The cost per kilometre could be as much as RM23mil for a coastal highway compared with RM15mil-RM16mil per kilometre for a ‘normal’ highway.”
On Tuesday, KEuro said it would raise RM57.8mil to fund its portion of the highway via a share placement exercise to “independent third-party investors who would be identified later”.
Recall, in January, KEuro had signed the WCE concession agreement with the Government, raising some concerns including the 60-year concession period and whether the Government would support the loan of RM2.24bil and an interest subsidy of up to 3% from commercial loans for 22 years.

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Surin, who also con trols MPHB Capital Bhd, owns a 32.62% indirect stake in MWE.

However, it has been reported that the reason for the seemingly favourable terms, including the long concession period and the Government’s supportive measures for the WCE project, was mainly to ensure the “bankability” of the project.
IJM Corp, currently the second single-largest shareholder in KEuro with a 22.96% stake, has reportedly said it was eyeing 70% of the WCE project’s work portion worth RM4bil.
The WCE, to be among the largest infrastructure projects in Selangor, would potentially have an economic spin-off effect of close to RM15bil, according to an analyst.