Prasarana Malaysia

Projek Usahasama Transit Ringan Automatik Sdn Bhd (Putra-LRT)

Putra-LRT was incorporated in Malaysia on 15 February 1994 to design, construct, finance, operate and maintain the Klang Valley's LRT system, known today as the Kelana Jaya Line. The company, which was 100% owned by Renong Berhad, signed the concession agreement with the Malaysian government on 7 August 1995. To fund the project, Putra-LRT obtained a RM2 billion loan, comprising RM1 billion conventional facility and RM1 billion Islamic facility, from 27 Malaysian financial and non-financial institutions which was arranged by four major Malaysian financial institutions, namely Commerce International Merchant Bankers Bhd (CIMB), Bank Bumiputra Malaysia Bhd (BBMB), Commerce MGI Sdn Bhd (CMGI) and Bank Islam. The 27 institutions included the KWSP (EPF), Affin Bank and Public Bank.

The takeover of Putra-LRT can be said to have started from 30 September 1999 when the payment of interest amounting to RM44,589,020.33 became due. Failure to pay resulted in the entire loan amount becoming due. At that time, Putra-LRT had already requested the Corporate Debt Restructuring Committee of Malaysia's central bank, Bank Negara, to help restructure its debts. A proposal by the Corporate Debt Restructuring Committee, which involved the government taking over the two LRT lines and then leasing them back to the two companies, was deemed not acceptable.

The restructuring began moving again when the government accepted the concept of setting up two separate government-owned companies, one to own and the other to operate public transport. The first step towards nationalisation of Putra-LRT took place on 26 November 2001 when Prasarana acquired all the rights, benefits and entitlements under the loan from Putra-LRT's and also Star-LRT's lenders (see below for takeover of Star-LRT). This effectively made Prasarana the creditor of Putra-LRT and Star-LRT. The loans owed by both companies stood at approximately RM5.7 billion at that time. The purchase consideration was satisfied via the issuance of RM5.468 billion fixed rate serial bonds by Prasarana guaranteed by the government to the respective Star-LRT and Putra-LRT lenders. According to the Corporate Debt Restructuring Committee, the successful resolution of the debt restructuring of the two companies was estimated to have reduced the level of non-performing loans in the Malaysian banking system by RM2.9 billion or 0.7% on a net six-month basis. Commerce International Merchant Bankers Bhd was appointed as was appointed as facility agent.

On 8 December 2001, Prasarana issued Putra-LRT with a notice of default and demanded payment of all outstanding amounts within 14 days. Putra-LRT replied on 24 December 2001 and informed Prasarana that it was not able to settle the amounts. It also requested the government to appoint another party or itself to purchase the assets of the company in accordance with the terms of the concession agreement between Putra-LRT and the government. A statutory demand, required under the Malaysian Companies Act 1965, was then issued by Prasarana on 26 December 2001 asking Putra-LRT to settle the amount owing within 21 days. Putra-LRT again replied on 17 January 2002 by saying that it was unable to settle the amounts owed and requested the government to take over. Winding up petitions were filed on 8 February 2002 and served on the company on 20 March 2002. On 26 April 2002, the Kuala Lumpur High Court made an order for the winding up of Putra-LRT and on the same date, appointed the Gan Ah Tee, Ooi Woon Chee and Mohamed Raslan Bin Abdul Rahman as liquidators. Earlier on 3 April 2002, the Malaysia Ministry of Finance had officially announced that the government via Prasarana was taking over the assets of both Putra-LRT and Star-LRT.

On 30 August 2002, Putra-LRT entered into a sale and purchase agreement with Prasarana for the sale of all its assets. The consideration for the sale consisted of the balance after the project cost of RM5,246,070,539 is offset by the amount of debt owed to Prasarana, plus the project cost from 1 April 2002 until 1 September 2002 which was set as the completion date of the sale, plus a sum of RM16,867,910 being the "unverified amount of project costs" which was subsequently verified by supporting documents. The entire cost of Prasarana taking over Putra-LRT's assets was reported to be RM4.5 billion.

Prasarana took over Putra-LRT assets and operations from 6.00 a.m. on 1 September 2002.

Sistem Transit Aliran Ringan Sdn Bhd (STAR-LRT)

Details of the takeover of Sistem Transit Aliran Ringan Sendirian Berhad (abbreviated to Star-LRT), which operated what is known today as the Ampang Line, are a little more difficult to come when compared with the takeover of PUTRA-LRT because the company was not owned by any public listed company. The shareholders of Star-LRT, which was formed on 13 November 1991, were the Malaysian Employees Provident Fund (25%), Kuala Lumpur Transit Group Assets Sdn Bhd (a 50:50 joint venture between Germany's AEG Pte Ltd, the electronics division of Daimler-Benz, and British construction firm Taylor-Woodrow) (30%), Lembaga Urusan Tabung Haji (Pilgrims’ Fund Board) (15%), Lembaga Tabung Angkatan Tentera (5%), Kumpulan Wang Amanah Pencen (5%), STLR Sdn Bhd (5%) and Shell Malaysia/Sabah/Sarawak (5%), American International Assurance Co Ltd (10%), Apfin Investments Pte Ltd, the investment arm of the Singapore Government (5%). The 60-year concession agreement between Star-LRT and the Malaysian government for Phase One of the project (between Sultan Ismail and Ampang stations) was signed on 22 December 1992 while the separate concession agreement for Phase Two (between Chan Sow Lin and Sri Petaling stations, and Sultan Ismail and Sentul Timur stations) was signed on 26 June 1995. The cost of Phase One was RM1.2 billion and RM2.2 billion for Phase Two. Star-LRT raised loans amounting to RM800 million for Phase One and RM1.32 billion from Bank Bumiputra Malaysia Bhd for Phase Two.

In the late 1990s, Star-LRT, like Putra-LRT, also defaulted in its loan repayment and on 30 November 2001, the Corporate Debt Restructuring Committee of Malaysia's central bank Bank Negara announced that Prasarana had taken over the debts of Star-LRT together with that of Putra-LRT. The combined debt of both companies amounted to RM5.5 billion.

On 8 December 2001, Prasarana issued a letter of demand for a sum of RM1,045,681,273.83 owing as at that date pursuant to a facility agreement entered on 13 August 1993. There was however no reply. On 10 December 2001, another letter of demand was issued to Star-LRT for a sum of RMI,498,538,278.58 pursuant to a loan agreement dated 17 July 1995 for the financing of Phase Two of the project. On 26 December, it served statutory notice of demand on STAR-LRT, again asking for the return of the sum and the company only managed to make part payment.

Two petitions to wind up Star-LRT were filed with the High Court on 21 February 2002 for the failure to pay RM1,051,509,127.16 as at 26 December 2001 for the first loan and the failure to repay the second loan amounting to RM1,506,385,705.28 as of 26 December. On 3 May 2002, the High Court appointed Gan Ah Tee, Ooi Woon Chee and Mohamed Raslan Abdul Rahman as temporary liquidators.

On 1 September 2002, Prasarana took over the assets and operations of Star-LRT. The takeover reportedly cost the government RM3.3 billion.

Intrakota Komposit Sendirian Berhad

Intrakota Komposit Sendirian Berhad, a subsidiary of public-listed company DRB-Hicom Berhad, was one of two consortia picked in 1994 to run the city/stage bus service in Kuala Lumpur and its surrounding suburbs. The other company was Park May Berhad which operated its buses under the brandname Cityliner. Under the policy, Intrakota bought and took over the routes of two traditional Kuala Lumpur bus companies, namely SJ Kenderaan Sendirian Berhad (better known as Sri Jaya) and Toong Fong Omnibus Company Sendirian Berhad, one of Kuala Lumpur's first bus companies. Intrakota also took over most of Kuala Lumpur's minibus routes after the government terminated their services in 1998. All buses were branded as Intrakota.

The circumstances leading to Intrakota's financial difficulties could be blamed on the 1997 Asian financial crisis, the decreasing number of people using public transport and the failure by the government to implement the two-bus-consortia policy which resulted in unexpected competition.

In 1999, the Intrakota group of companies came under the purview of the government's Corporate Debt Reestructuring Committee and when the committee concluded its business in June 2002, Intrakota and its parent company DRB-Hicom continued negotiating with the government which eventually led to its buses being taken over by Prasarana.

The company's dire situation was clear when on 29 January 2003, creditors RHB Finance Berhad and RHB Delta Finance Berhad repossessed 34 of its buses. The buses were returned to Intrakota after several rounds of negotiations with the creditors. On the same day, it also revealed that it was being sued or a total of RM25,893,558.36 by AMMerchant Bank Berhad (RM11,234,839.93), Kewangan Bersatu Berhad (RM1,091,939.12) and Sogelease Advance (Malaysia) Sendirian Berhad (RM13,566,786.31). Later, when restructuring the debt of Intrakota, DRB-Hicom declared that the company had an accumulated debt of RM258 million as at 30 June 2003, comprising a principal sum of RM188.2 million and interest amounting to RM69.8 million.

On 29 October 2003, Intrakota, together with its subsidiaries Intrakota Consolidated Berhad, SJ Kenderaan Sendirian Berhad, Toong Fong Omnibus Company Sendirian Berhad, Syarikat Pengangkutan Malaysia Sendirian Berhad and SJ Binteknik Sendirian Berhad, as well as another DRB-Hicom subsidiary Euro Truck and Bus (Malaysia) sendirian Berhad, entered into a sale and purchase agreement with Prasarana for the sale of their bus related assets for a total of RM176,975,604. The original acquisition costs of the assets were approximately RM557.4 million, which were acquired over a period of 9 years since 1994. The net book value of the assets as at 30 June 2003 was approximately RM269.9 million.

The sale of assets to Prasarana was completed on 5 May 2004. On the same day, Prasarana signed an interim operations and maintenance agreement with Intrakota Consolidated for the temporary operation of the bus network previously operated by Intrakota. The interim arrangement was terminated when Prasarana handed over the operations to RapidKL in November 2004.

In May 2008, the Malay Mail ran an article investigating the fate of the remaining Intrakota buses. 1,000 Iveco TurboCities that were originally purchased at a cost of RM0.5 million each were found abandoned in Batang Kali and Rawang, each only guarded by a single security personnel. Criticism was directed at RapidKL on what is seen as a 'wasteful exercise', the old buses being only 7 to 15 years old and more expensive than the newly purchased Mercedes-Benz buses by RapidKL.

Cityliner Sendirian Berhad

The Cityliner buses involved in the takeover by Prasarana were those operated by two companies – Cityliner Sendirian Berhad and Len Chee Omnibus Company Sendirian Berhad – in Kuala Lumpur under the brand name “Cityliner”. The two companies were subsidiaries of previously public-listed Park May Berhad, which in turn was a subsidiary of Renong Berhad. Cityliner, which was incorporated on 30 August 1994, was wholly owned by Park May while Park May owned 85% of Len Chee.

In 1995, Cityliner took over routes previously operated by Len Omnibus Company Berhad, Selangor Omnibus Company Berhad and Foh Hup Transportation Company Berhad which were within a 15 km radius of the city centre of Kuala Lumpur under the government's policy of having two bus consortia to operate city buses in the Klang Valley. Len Chee was incorporated on 29 December 1937 and was one of the pioneer bus companies in Kuala Lumpur. It was bought over by Park May in 1995 under the same government policy.

Cityliner was also the brand name for bus services in parts of Seberang Perai, Penang; parts of Negeri Sembilan state; Kuantan, Pahang; and between Klang and Sabak Bernam in Selangor. These services, known as the “northern”, “southern”, “eastern" and "central groups” respectively, were not involved in the takeover by Prasarana.

Operating city or stage buses has always been Park May's main business. However, the group, which also operates long-distance express bus services began making losses following tough operation circumstances, with city/stage bus operations contributing a huge proportion of these losses. Besides a reduction in the number of public transport users, the company also blamed the government's failure to implement its earlier policy of only having two bus consortia, one of which was Park May, to operate city buses in Kuala Lumpur for its financial difficulties. This began affecting its bus operations as lack of maintenance caused frequent breakdowns, resulting in unreliable service.

Park May, on 1 March 1999, applied to the Corporate Debt Restructuring Committee to seek the assistance to restructure its debts.

On 27 October 2003, Cityliner and Len Chee signed an asset sale and purchase agreement with Prasarana for the sale of 321 buses and 43 buses owned by Cityliner and Len Chee respectively for a total cash consideration of RM14,841,012. Of this amount, RM13,456,649 was to be used as part redemption of the commercial paper/medium term notes programme which was obtained on 23 January 2007, and RM1,220,000 was to go towards defraying the expenses of the sale to Prasarana. The sale was completed on 30 April 2004 for a total adjusted cash consideration of RM14,438,920 for 347 buses.

Upon completion of the sale, Prasarana appointed Kenderaan Mekar Murni Sdn Bhd, a subdiary of Kumpulan Kenderaan Malaysia Berhad, to operate the buses on an interim basis until it handed over operations to RapidKL in November. Under Park May's restructuring scheme, Kumpulan Kenderaan Malaysia ultimately instituted a reverse-takeover of Park May and assumed Park May's listed status under the new name Konsortium Transnasional Berhad.