KUALA LUMPUR (Nov 14): Holders of Sistem Lingkaran-Lebuhraya Kajang Sdn Bhd's (Silk ) Islamic bonds or sukuk had approved the sale of Silk Holdings Bhd's entire stake in the highway operator to IJM Corp Bhd for RM395 million cash.

Silk Holdings said in a filing to Bursa Malaysia, the approval was secured at the company's extraordinary general meeting today.

The sukuk holders also released Silk Holdings from its obligation under the corporate guarantee for the sukuk, the company said.

Holders of Silk's RM2 billion sukuk include CIMB Bank Bhd, Bank Islam Malaysia Bhd and Etiqa Takaful Bhd.

Silk is a wholly-owned subsidiary of Silk Holdings and the concession holder for the 37km Kajang Silk Highway. The highway links the northern and southern parts of Kajang, Selangor.

Silk Holdings is selling Silk to unlock the value of its investment in Silk. The sale will enable Silk Holdings to concentrate on growing its oil & gas support-services business.

Silk had secured the highway concession in October 1997. The deal required Silk  
to finance, design, construct, operate and maintain the highway for 33 years.

Construction of the highway was largely financed by RM2 billion worth of sukuk in 2001.
These debt papers were, however, downgraded by rating agencies in 2007 as Silk was unable to redeem a RM150 million portion of the sukuk.

The highway did not do well in the early years when it opened for traffic in June 2004. Traffic volume was below forecasts, resulting in low toll revenue and tight cash flow for Silk.

Today, Silk Holdings shares rose as much as 6.5 sen or 8% to 86 sen before reducing gains. At about 4.15pm, the stock was traded at 85.5 sen for a market capitalisation of about RM600 million.