Tuesday, April 10, 2012

MRCB … dated March 2012

Sources say it is to be compensated by the government following changes to the terms under which it can collect toll on the EDL in Johor. The amount is to be worked out, but it will compensate MRCB for a loss in come due to changes to the terms of the concession.

Originally, all vehicles with exception of motorcycles, using the Causeway were to pay toll on the EDL. It is learnt that the governments is now looking at charging a levy on all foreign registered vehicles going into Singapore using the highway.



The EDL, which leads to CIQ complex and onwards to the Causeway that connects Johor Baru in Singapore , is scheduled to be opened to traffic for a trial period of one month from April 1, 2012.

Najib announcement related to the use of EDL however, has touched a raw nerve – bond holders are concerned about MRCB’s abilities to meet debt repayment obligations if the terms of the concession are altered.

The announcement is different from the terms of the concession agreement. Bond holders subscribed for the papers issued by MRCB sponsored SPV on the understanding that all vehicles, except motorcycles that use the Causeway will have to pay toll on the EDL.

Bond holders subscribed for two tranches of Islamic debt papers issued by the SPV, known as MRCB Southern Link Bhd, which amounted to rm1.044 billion. RAM Ratings has already placed the paper with tenured up to 2027 on negative watch.

The negative Rating Watch reflects the uncertainties pertaining to the EDL’s ability to commence tolling operations, its eventual tolling mechanism and traffic volume. These factors could have a negative bearing on the company’s cash flow profile and debt servicing ability throughout the tenure of the sukuk.

The first debt obligation for MRCB Southern Link is due in Dec 2012.

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