SMRT business outlook will improve after selling rail assets to Govt: CEO

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http://www.todayonline.com/singapore/smrt-business-outlook-will-improve-after-selling-rail-assets-govt-ceo?singlepage=true

SMRT’s business outlook will improve after it sells its rail assets to the Government, its chief executive Desmond Kuek said yesterday.

He confirmed that SMRT had been in talks with the Government for some time on extending the new rail-financing framework.

Under this framework, the Government will pay for and own rail assets on the lines, such as the trains and signalling systems, which will be leased to operators.

This arrangement will, among other things, remove the burden of capital expenditures on asset replacement from the operators, which will focus on other service improvements and maintenance work. SBS Transit’s Downtown Line was the first to be placed under the framework.

Responding to media queries, a Ministry of Transport spokesperson confirmed that it had received SMRT’s latest proposal but said the ministry needed to study it in detail.

On Wednesday, SMRT reported overall net earnings of S$61.9 million.

A day after, SMRT shares soared almost 20 per cent as investors speculated that a sale of assets to the Government was imminent.

When asked about the surge in share prices and why the submission of SMRT’s proposal to the Government was not made known to the public earlier, Mr Kuek shot back: “Is that the reason for the share price increase?”

He reiterated that the company did not know “the real reason”. “We don’t know of any material information that we did not previously disclose, that could have led to what happened last Thursday. There is a whole lot of speculation, and we are trying to understand what the activity is about.”