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Waskita to divest loss-making N. Sumatra toll road to Hong Kong's Road King expressway for $57m

Jakarta Globe - March 9, 2021

Muawwan Daelami, Jakarta – Waskita Toll Road, or WTR, a subsidiary of state-controlled construction company Waskita Karya, has announced a plan to divest all of its 30 percent interest in the Medan-Kualanamu-Tebing Tinggi Toll Road to Kings Ring, a subsidiary of Hong-Kong-based investment company Road King Expressway in a deal worth $57 million.

The sale was the latest in a series of Indonesia state-construction companies' toll road divestments in the past few months to ease the burden in their balance sheet.

Waskita Toll Road and Kings Ring have signed a conditional sale-purchase agreement, Waskita Toll Road's president director Septiawan Andri Purwanto said in a statement on Monday.

"After this initial agreement is agreed upon, we will immediately process the documents and complete whatever is needed by the investor and the WTR before the sale-purchase agreement is signed," Septiawan said.

Under the agreement, Waskita Toll Road would sell 30 percent interest in the Medan-Kualanamu-Tebing Tinggi Toll Road for Rp 824 billion ($57 million).

Waskita valued its shares in the Medan-Kualanamu-Tebing Tinggi Toll Road at Rp 348 billion at the end of the third quarter 2020, down 11 percent from Rp 392 billion at the end of last year, after booking Rp 45 billion loss over the nine-month period as the Covid-19 pandemic reduced traffics.

Fery Hendriyan, Waskita Toll Road's director of business development and quality, health, safety, and environment (QHSE), said the divestment would build momentum for more toll road divestments in Indonesia.

"We hope that the divestment process will run smoothly so that synergy between the Waskita Group and the Road King Expressway can run smoothly," Fery said.

The Medan-Kualanamo-Tebing Tinggi is a toll road located in North Sumatra and is part of the Trans Sumatra Toll Road (JTTS). The 62-kilometer toll road has been operational since 2016, serving as a key link between the North Sumatra capital – Indonesia's third-largest city by population – and Kualanamu International Airport, the country's fifth-busiest airport serving more than 10 million passengers per year.

Jasa Marga Kualanamu Tol, a consortium of state-controlled construction companies that include Jasa Marga, Pembangunan Perumahan, Waskita Karya, and Hutama Karya, invested Rp 4.1 trillion for the construction of the toll road. At the same time, the government shouldered the Rp 1.5 trillion land clearing cost.

Waskita has said earlier that it would put Kanci-Pejagan, Pejagan-Pemalang, Pemalang-Probolinggo toll roads on sale and offer either Medan-Kualanamo-Tebing Tinggi toll road, Semarang-Batang or Pemalang-Batang to investors this year.

In 2019, Waskita sold Solo-Ngawi and Ngawi-Kertosono toll roads, two sections of Transjava Toll Road, to another Road King Expressway's subsidiary Kings Key for Rp 2 trillion.

Source: https://jakartaglobe.id/business/waskita-to-divest-lossmaking-n-sumatra-toll-road-to-hong-kongs-road-king-expressway-for-57