WZ Satu aborts plan to buy Silk Highway

Following the Putrajaya sign board along Silk highway near Balakong takes you through three toll plazas, costing motorists RM3 in toll fares, before you reach Putrajaya. There's actually a shorter and toll-free alternative via Seri Kembangan.

KUALA LUMPUR: WZ Satu Bhd has become the second company -- after IJM Corp’s unit Road Builder (M) Holdings Bhd -- to abort its plan to buy the Kajang Traffic Dispersal Ring Road, popularly known as Silk Highway.

In a statement to Bursa Malaysia on Friday, WZ Satu and Silk Holdings Bhd said they mutually agreed not to proceed with the transaction, which involves the RM368mil sale of Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd (Silk SB), the toll concession holder for the 37km highway.

The parties, which inked a heads of agreement (HOA) on June 1, were unable to agree on the final terms for the definitive agreement, WZ Satu said.

WZ Satu had not expected the proposed acquisition to result in a significant change of business direction, as it planned to acquire Silk SB together with other co-investor(s) to be identified.

The purchase consideration of RM368mil was to have been satisfied with RM239.25mil in cash and 125 million new WZ Satu shares.

WZ Satu said the HOA’s termination was not expected to have any material effect on the company’s earnings per share and net assets per share for the financial year ending Aug 31, 2017.

In May 2014 Road Builder had also signed a HOA with Silk Holdings to buy Silk SB for RM398mil (later revised to RM395mil) entirely in cash, but the share sale agreement was terminated in November the same year due to “non-fulfilment of certain conditions precedent within the agreed timeline.”

Silk SB has a 36-year concession period that will end on July 31, 2037.

WZ Satu’s and Silk Holdings’ announcements came just two days after Ekovest announced it was selling a 40% stake in the Duta-Ulu Kelang Expressway (Duke) to the Employees Provident Fund for about RM2.8bil.