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Tuesday, March 31, 2009

TSR to build, equip RM1.7bil hospital

PETALING JAYA: Construction group TSR Capital Bhd looks set to build and equip a teaching hospital costing RM1.7bil for International Islamic University Malaysia (IIUM) in Nilai, Negri Sembilan.

Prime Minister Datuk Seri Abdullah Ahmad Badawi will today officiate the ground-breaking ceremony for the hospital which will be funded by private finance initiative (PFI).

Under a PFI scheme, a private sector company will finance the development of infrastructure and lease it to the Government over a period of many years.

TSR recently announced to Bursa Malaysia that it has received approval in-principle from the Economic Planning Unit for its subsidiary Medicalcity Corp Sdn Bhd to develop a post-graduate teaching hospital for IIUM.

The project remains subject to terms and conditions to be negotiated and a concession agreement to be executed.

TSR senior accountant K. K. Ng said Medicalcity was a joint-venture company that was 70:30 owned by TSR and Lembaga Tabung Haji (LTH) group.

Medicalcity would design, manage the turnkey construction and finance the development of the hospital while TSR would construct and equip the facility, Ng told StarBiz yesterday. After TSR has completed construction, Medicalcity will provide maintenance services for the hospital and its facilities over the next 30 years.

“The doctors can focus on medical treatment and teaching while the building and facility maintenance services are outsourced to us,” Ng said.

The PFI arrangement will be under a build-lease-maintain and transfer (BLMT) scheme where the facilities will be transferred to the Government at the end of the lease period.

There will be key performance indicators to be adhered to by Medicalcity in its maintenance contract for the facilities.

The total development cost of RM1.7bil comprises about RM1bil for construction of the hospital and about RM700mil for the medical equipment.

While that is a huge sum to finance at this time, it is doable because bankers would be comfortable with the Government as the customer. Even so, Medicalcity will work on a debt-to-equity ratio of 80:20 as against a higher leverage of 90:10 that was originally planned.

“That’s to enable us to work towards a triple A rating for the bank loans. Bankers will be more comfortable if we put 20% of equity into the financing structure,” Ng said.

The teaching hospital will be built on a large piece of land in Nilai that’s owned by the Higher Education Ministry, and within Bandar Enstek that is being developed by a joint venture of Negri Sembilan State Development Corp and TH Properties Sdn Bhd, a subsidiary of LTH.

It is also near a 370-acre site owned by TH Properties and planned for a medical city. It is expected that TH Properties will form a joint venture with TSR to develop that.

The medical city will comprise facilities to offer services such as a combination of western and eastern or herbal medicine and treatment.

The whole concept focuses on the dual objectives of training knowledge workers and making available herbal treatment in a managed facility.

By The Star (by C.S.Tan)

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