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Road Builder Holdings Bhd (RBH), a wholly-owned subsidiary of Malaysia's conglomerate IJM Corporation, has entered into a share sale agreement to acquire SILK Holdings, the concession holder for the 37 km Kajang Traffic Dispersal Ring.
SILK Highway is the 37 km (216 lane km) highway concession which was awarded by the Government of Malaysia to SILK pursuant to a concession agreement (CA) executed on 8 October 1997. Under the CA, SILK is to finance, design, construct, operate and maintain the SILK Highway for a concession period of 33 years.
The initial concession period was extended on 1 August 2001 to a total concession period of 36 years that will end on 31 July 2037.
The transaction worth RM395 million (US$123.4 million). All approvals are expected to be obtained by the fourth quarter of 2014.
IJM Corporation reported:
Withe the proposed acquisition, the total length of the group's toll roads in Malaysia, including the upcoming 233km West Coast Expressway, will increase from 325.8km to 362.8 km. The proposed acquisition is expected to contribute positively to the future earnings and cash flow of the group as Silk Highway is a growing hiway with increasing traffic growth.
According to SILK's annual report, the PPP road project recorded total traffic volume of 62.9 million vehicles for fiscal year 2013 (ended in July), an increase over the total traffic volume of 55.7 million recorded in the previous financial year.
Kajang Dispersal Link Expressway is an expressway built to disperse and regulate the traffic flow in Kajang, Selangor, Malaysia. The expressway is to allow motorists to bypass the town centre of Kajang. It is also useful as the main ring road of Kajang.
The expressway utilizes the Touch 'n Go and Smart TAG electronic payment systems.