Following yesterday’s announcement that Amanat Lebuhraya Rakyat (ALR) is offering to acquire the shares of four Gamuda-linked highway concessionaires, Public Works Minister Datuk Seri Fadillah Yusof said further restructuring deals of this type with motorway operators were in preparation.

“The government invites the private sector to come up with such terms, where the concession companies will return the highways to the government once they settle their debts. It will be a relief for the people. There will be restructuring negotiations involving other motorway concessions after this,” he said yesterday, reported by Bernama.

Yesterday, Prime Minister Datuk Seri Ismail Sabri Yaakob announced that toll rates on highways operated by four concessionaires – Kesas, Smart Tunnel, Sprint and LDP – will not be increased until the end of their concession period, and this will will do via the restructuring of the four companies.

This ‘restructuring’ involves ALR – described as a private not-for-profit company mandated to assist the government in this deal – offering to acquire the shares of the four concessionaires, which have a total enterprise value of RM5.48 billion , according to Gamuda.

The move is said to save the government at least RM4.3 billion in subsidies, to be paid from January 1 this year until the end of the concession periods. The net result for motorists is that there will be no increase in toll rates until the end of the concession periods, which will be extended as a result of this agreement (all except for the Smart Tunnel, which will be shortened).

Fadillah said there was no government expense in this deal, nor were there any government guarantees for ALR’s funding of the dealership takeover. He added that with this method of restructuring, there would be no more for-profit shareholders looking at returns and dividends. ALR is also required to absorb all existing employees of the four concessionaires.

Current equity structure of the four motorway concessionaires – graphic by The Edge

So who is this charitable white knight called ALR? In May 2021, The edge reported that Gamuda was in talks to sell four of its road concessions to a private road trust, an independent entity funded entirely by private capital markets.

“We also claim that the proposal involves maintaining current toll rates unchanged with no further increases, with a short extension of the concession in order to fully recuse the government from paying any compensation (as is legally required of them under the agreements concession terms) to maintain toll rates as they are now, throughout the proposal period,” Gamuda said at the time.

“In our proposal, the government would have no equity or interest in the procuring entity, and therefore would not need to spend its own money on the acquisition and, furthermore, would not need to provide any security. government,” he added.

If this all sounds familiar, in 2019 the then Pakatan Harapan government offered RM6.2 billion to acquire the same four Gamuda-linked toll concessionaires. The difference now is that the government has managed not to spend any money on the deal and it doesn’t have to maintain or operate the highways.