The best performing construction group this year, IJM Construction Bhd found ample opportunities in the last one year. Excerpts from an interview with its managing director Datuk Krishnan Tan on the reasons why it is buying a stake in Kumpulan Eoruplus Bhd group.
STARBIZ: What is it in K Europlus that attracts you?
Krishnan: It holds the concession to build the west coast highway. It also holds the concession to develop Canal City (in Kuala Langat, Selangor). We bought into the project one level below K Europlus. Canal City is 70%-owned by K Europlus and Selangor state-owned companies. Now, we will have a presence through K Europlus.
K Europlus also owns 49% of Talam (Corp Bhd). I don't need to go and buy Talam.
StarBiz: There are sceptics who believe the west coast highway is not viable. Would you go ahead to build it?
Krishnan: Not immediately. The concession has been awarded but the terms and conditions of the concession have not been finalised with the Government yet.
The western corridor of Selangor looks interesting but certain financial aspects have to be ascertained.
StarBiz: Is it both the construction and property development projects that interest you?
Krishnan: The immediate problem in the K Europlus group is its cashflow. Once we fix that, there is enormous potential for us. Its assets can be re-branded. We can add value to it.
StarBiz: Will IJM put money into K Europlus?
Krishnan: No, but it's got an enormous asset base and we'll add credibility to the entire scheme of things. With the cooperation of all the parties concerned, it'll be a win-win situation for everyone.
StarBiz: Critics feel K Europlus has too much debt.
Krishnan: The debts are more at the Talam level. It's a conditional acquisition (of K Europlus). It's conditional on a due diligence to be done. There is a mismatch of debts and cashflow. If there are no problems, the share price won't be at this level.
StarBiz: Will Tan Sri Chan Ah Chye leave the group?
Krishnan: No, he will remain a director. He has the entrepreneurship and business contacts that will continue to be useful to the group.
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