KUALA LUMPUR (June 16): Maju Expressway Sdn Bhd (MESB), which has defaulted on its RM50 million bond principal, is undertaking a restructuring exercise that is expected to be completed by early August.

"MESB is undertaking a restructuring exercise both at Mex1 Capital Bhd as well as at its subsidiary MESB Sdn Bhd," said NewParadigm Capital Markets Sdn Bhd, the financial adviser for the restructuring exercise.

The restructuring exercise would comprehensively address the liquidity issues faced by MESB resulting from the Covid-19 pandemic, a spokesman for NewParadigm said in a statement in response to an article on the matter in The Edge yesterday.  

"To provide context, Maju Expressway has been dealing with acutely lower traffic volumes due to the movement control order that is in place as a result of the Covid-19 pandemic," it said.

The sukuk holders are expected to vote on the restructuring exercise proposal by early July, said NewParadigm.

“As part of the restructuring exercise, the principal repayment of RM50 million due on June 15 will be suspended. However, all profit payments under the respective tranches remain current,” it added.

MESB, which is owned and operated by Maju Holdings Sdn Bhd, is the concessionaire of the 26km Maju Expressway, which links the Kuala Lumpur city centre with Cyberjaya and Putrajaya.

CIMB Investment Bank, the bond facility agent, said in a filing with Bank Negara Malaysia’s Fully Automated System for Issuing/Tendering (FAST) website that MESB has defaulted on its RM50 million bond principal after failing to redeem its outstanding amount.

On April 27, MEX II Sdn Bhd, another Maju Holdings subsidiary, deferred its RM1.3 billion Islamic medium term notes' principal repayment and profit payment for up to four months.

A few days prior to that, it was reported that MEX II had deferred coupon payment due on April 30 for the highway operator’s RM150 million junior bonds as the requisite conditions pursuant to the trust deed dated April 20, 2016 had yet to be fulfilled.

MEX II was set up to issue bonds to raise money to finance the proposed 18km Putrajaya-KLIA highway, according to MESB.