SILK Holdings exits toll highway in RM380m deal with PNB

KUALA LUMPUR: Toll highway concessionaire SILK Holdings Bhd proposes to dispose of its entire interest in wholly-owned subsidiary Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (SILK Sdn Bhd) to Permodalan Nasional Bhd (PNB) for RM380 million cash.

SILK Holdings signed a conditional share purchase agreement with PNB yesterday.

SILK Sdn Bhd is the concession holder of the 37km Kajang Traffic Dispersal Ring Road (SILK Highway) under a 36-year concession agreement which ends on July 31, 2037.

SILK Highway is a primary urban road serving the southeastern corridor of the Klang Valley, linking Balakong, Sungai Long, Kajang, Bangi, Serdang and Putrajaya as well as these townships to the Sungai Besi Highway, the North South Expressway, Cheras-Kajang Highway, Kajang-Seremban Highway, South Klang Valley Expressway and, in the future, to the East Klang Valley Expressway.

SILK Holdings and its subsidiaries intend to allocate up to RM200 million from the proceeds of the disposal for future investments to enhance and strengthen the group’s existing offshore marine support services business and investments, and related businesses in the oil and gas segment, as well as other viable investment opportunities to be identified.

Up to RM70 million will be allocated for distribution to shareholders of SILK Holdings, and RM110 million for general corporate and working capital.

“The proposed disposal is in line with SHB’s (SILK Holdings) strategy to monetise and unlock value of its infrastructure assets to allow the SHB group to streamline its operations and use its financial resources to focus on offshore marine support services,” SILK Holdings said in a statement.

The acquisition of SILK is part of PNB’s strategy to expand and enhance its portfolio of highway infrastructure assets which provides a recurring income stream, in line with its objective of enhancing long-term sustainable returns for its unit holders.

PNB’s existing investments are through its wholly-owned subsidiary, Projek Lintasan Kota Holdings Sdn Bhd, which operates three highways – Ampang Kuala Lumpur Elevated Highway, Guthrie Corridor Expressway and Kemuning-Shah Alam Highway.

Subject to all approvals being obtained and the fulfilment of conditions including the completion of due diligence, the proposed disposal is expected to be completed by this quarter.

Affin Hwang Investment Bank Bhd (Affin Hwang IB) is the principal adviser for SILK Holdings, with Astramina Advisory as the financial adviser. They are also joint advisers of SILK Holdings for the deal. PNB’s principal adviser is Maybank Investment Bank.