KUALA LUMPUR (Oct 30): The abolishment of the toll fare collection at the Eastern Dispersal Link (EDL) in Johor from next year could benefit Malaysian Resources Corp Bhd (MRCB), which is the highway's 34-year concession holder, said UOB Kay Hian Securities (M) Sdn Bhd.

While details are scarce, UOB Kay Hian has laid out two possible scenarios: either MRCB being compensated for the loss in future toll revenues, or the government buying the EDL "outright".

"EDL currently bleeds about RM90 million per year, mostly finance cost, and makes up RM1 billion of MRCB's total debt," the firm said in a note to clients today.

As at Dec 31, 2016, MRCB's borrowings amounted to RM2.94 billion, which includes more than RM1 billion of debt instruments linked to the EDL highway.

MRCB's wholly-owned unit, MRCB Southern Link Bhd, is the funding conduit of the EDL, and issued RM845 million of sukuk, which RAM Rating Services Bhd graded at BB3, with a negative outlook "on continued low safety of payment" to meet financial obligations.

RAM had in a July 13 statement noted that the EDL continues to rely on shareholder support to repay its financial dues, which is currently suffering from the "persistent mismatch between annual cash generation and annual debt repayment owing to the lower-than-expected traffic volume".

Last Friday, Prime Minister Datuk Seri Najib Razak had in Budget 2018 announced that the government will abolish the toll fare collection at the EDL, starting from Jan 1, 2018.

Within hours after the speech by the Prime Minister, MRCB told Bursa Malaysia that said it will "make the necessary announcement upon receipt of further details from the government".

The 8.1km EDL, built at a cost of RM1 billion runs from the Pandan interchange of the North South Expressway to the Customs, Immigrations and Quarantine complex at Bukit Chagar in Johor Bahru.

Since August 2014, MRCB has been collecting toll charges at the EDL since at a rate of RM6.80 per trip.

MRCB's share price was trading 10 sen or 9.71% higher at RM1.13 just before the close of trading, for a market capitalisation of RM4.96 billion.