08 May 2012
MMC Corp to submit KTMB privitisation proposal to the Malaysian Government upon completion of due diligence, confident to turn around loss making national rail company - Managing Director Datuk Hasni Harun
(MMCCORP opening stock price today (8.5.2012) was RM 2.73)
MMC Corp Bhd expects to complete due diligence on Keretapi Tanah Melayu Bhd (KTMB) by between July and August this year, its group managing director Datuk Hasni Harun said.
The due diligence is for MMC to participate in the proposed privatisation of the national rail company. “We have appointed consultants.
We are at 30 per cent of the (due diligence) exercise now. There are still 70 per cent to complete before we can forward our privatisation proposal to the government,” Hasni told Business Times.
KTMB is currently incurring losses averaging RM200 million a year and Hasni said MMC’s proposal will be aimed primarily at turning around the rail company.
Acceptance of the proposal will, however, be the sole prerogative of the government.
“We feel we have a business model for the government to consider,” he said. Earlier reports said that MMC, a construction and infrasructure company, plans to pump in as much as RM1 billion to take control of KTMB’s operations.
This is not the first attempt by MMC to take over the rail company’s operations. The company, together with Gamuda Bhd, was eyeing to privatise KTMB and take over its assets in 2003.
The consortium had held preliminary discussions with the government but nothing materialised.
“We are submitting the privatisation proposal because we feel we can do it. Obviously, we will propose pragmatic financial model and business model for KTMB to move forward,” Hasni said.
Reports put KTMB's accumulative net losses at RM1.45 billion up to 2008 and was unable to finance its operational costs and pay debts.
The rail operator's deep losses since it was corporatised in 1992 has been blamed on high operating costs. It made a net profit of between RM9 million and RM15 million from 1993 to 1995 before falling into the red again in the following years.
Hasni also clarified that MMC was not immediately looking at buying over Penang Port, as claimed in recent reports.
"It (taking over Penang Port) has nothing to do with MMC. The submission of proposal was made by Tan Sri Syed Mokhtar Al-Bukhary through Seaport Terminal, not MMC," he explained.
He said Penang Port was a big unit, handling one million TEUs (twenty-equivalent units) of containers but there was also a ferry business in its operations that has been incurring losses.
"As a listed entity, we would not want to acquire businesses that need to turn around first. We may buy later, but only the port business. We are not going to buy Penang Port as it is today because its ferry business is losing money," Hasni said.