PETALING JAYA: Toll operator PLUS Expressways Bhd and its unit will raise about RM1bil this year by issuing Islamic papers to fund its expansion and re-finance loan.

The first trenched of its Sukuk papers for RM350mil was expected to be launched over the next three months and used mainly to re-finance its bridging loan, said Plus managing director Noorizan Abd Hamid.

?Liquidity is an issue but with lower interest rates, we are re-looking at the market. We will make sure we get the best rates.

?Our gearing is also low and it is cheaper for us to fund our expansion via borrowings.  We have got the approvals for Plus and Projek Lebuhraya Utara-Selatan Sdn Bhd to raise the funds,? Norizah told StarBiz in an interview.

The bridging loan was for the purchase of Linkedua and Elite highways last year. 

Listed on the Dow Jones Islamic Index, PlUS can only borrow 30% in conventional papers and rest Islamic.  PLUS is looking at an Ijarah  sukuk issue.

Both CIMB Islamic and Bank Islam are handling Plus? Sukuk issue.

The second tranche of Sukuk will raise RM200mil, the amount PLUS needs to incest for its 60% stake in the Cimmanggis-Cibitung Toll ways project in Indonesia this year.

Apart from toll road operations is Malaysia, PLUS has two concessions overseas, in Indonesia and in Mumbai, India.

It is in the midst of completing a toll road project in Mumbai that should help the company achieve its target of 30% growth in its key performance indicators (KPIs).

PLUS needs to buy more concessions to meet its KPI target this year, which is why it is raising funds.

?An acquisition is a solution and that is why we are looking at all possibilities locally and abroad,? Noorizah said without elaborating.

India is an obvious market for PLUS after gaining experience there handling toll jobs.

Its tenders have been ?pre-qualified? by the National Highway Authority of India for a few stretches of toll roads.

?We are re-looking at pricing that we submitted earlier; time was not on our side (then).  We have also learned the finer points of doing business in India and we believe we have the capability and experience to pursue and manage bigger projects there,? Noorizah said.

In Indonesia, PLUS has experienced project delays, but Noorizah clarified that the toll operator was in advanced stages of finalizing a funding plan for the Cimmanggis-Cibituang Tollways.

Meanwhile, PlUS is waiting for the Government?s nod to raise toll rates for several roads t 14.96 sen/km from 13.6 sen.

Under the concession agreement, PLUS is to have a 10% toll hike for three years beginning Jan 1, 2008 to 2010 or the Government will have to compensate PLUS.

It was learnt that the 2008 compensation for PLUS could amount to RM180mil for the North-South Expressway, North Klang Valley Expressway and Federal Highway Route 2.  The 10% toll hike is for these three highways.

On the public outcry over toll hikes, Noorizah pointed out that PLUS was 86% owned by the Government via several agencies and the ?profits goes back to the Government and not individual investors.?

On dividends, she said PLUS was committed to pay 15.5 sen a share for its financial year 2008.