Zelan Looks For Steady Concession Income

Zelan Looks For Steady Concession Income
The Star 

Company expects income stream of RM900mil over 25 years from GITT

KUALA LUMPUR: Engineering and construction group Zelan Bhd will focus on projects with concessions, such as the Gombak Integrated Transport Terminal (GITT) project, as the company looks for a steady income stream, said company director Datuk Hasni Harun.

"The company is moving towards organic growth now and we believe projects that we had bid for such as the Gombak Integrated Transport Terminal (GITT) from the Government can give a steady income to us. This project (offers) a 25-year concession that can give an income stream estimated to be worth close to RM900mil,' he told reporters yesterday after the company's AGM.

Zelan is controlled by MMC Corp Bhd, which has a 39.25% stake in the company .

Datuk Hasni Harun is also the group managing director of MMC.

Zelan Bhd chairman Datuk Anwar Aji said the Government had offered the GITT project to the company and that it was now negotiating the terms and conditions of the concession.

"The project will provide an additional RM220mil to the company's orderbook and is expected to be concluded in the next couple of months," he said.

Besides GITT, Zelan is also bidding for a teaching hospital project from an international university, as well as projects at Westport and Johor Port.

Anwar said Zelan would also participate in some projects secured by MMC, which owned 60% of a joint venture with Zelan called MMC Zelan Sdn Bhd, where Zelan held the remaining 40%.

"MMC will consider Zelan as one of the contractors but pricing-wise it will still be competitive because of related party transactions," he said.

On Wednesday, MMC told Bursa Malaysia it had entered into a joint venture agreement with Zelan to bid for infrastructure projects under the 10th Malaysia Plan (10MP).

Anwar said Zelan was working hard to turn around the company and scouting for new projects.

"We are still working hard to turn around the company to make us stay relevant in the market. We have been bogged down with a lot of problems, such as cost overruns and cash flow (problems) in current projects, so we spend a lot of time addressing all these issues," he said.

Zelan, which is now being run by four exco members, will announce the arrival of a new CEO when the time comes, according to Anwar.

He said the company would be holding its EGM on Sept 7 to get a mandate from shareholders to sell 30 million shares in IJM Corp Bhd.

Zelan has a 7.12% stake in IJM, which will be reduced to slightly above 5% after the sale.

Last month, the company told Bursa Malaysia it had proposed to obtain a mandate from its shareholders to sell up to 30 million shares in IJM Corp Bhd at a price to be determined later.

Based on a price of RM5.08 per share, Zelan said it would be able to raise RM152.4mil.

Of the amount, RM50mil would be used to repay debts while much of the remainder would be allocated for working capital purposes, the company said.