‘LOPSIDED’: Vast disparity in Selangor’s offers to Splash and Puncak hindering progress
GAMUDA Bhd’s 40 per cent-owned Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) has questioned the Selangor government’s valuation to take over water assets from its concessionaires.
Splash said the vast disparity in takeover offers to Splash and Puncak Niaga Holdings Bhd is holding back the water consolidation exercise in the state.
“It’s perplexing. I can’t help but feel amused with the stark contrast of valuation between the Puncak group and Splash,” Splash chairman Tan Sri Wan Azmi Wan Hamzah said yesterday.
“The fact that we are still hopeful for an offer price that is close to one-time book value tells volumes about our expectations. Is it too much? I hardly think so,” Wan Azmi added.
Splash remains unwavering in its stand on getting a reasonable valuation for its assets.
“We can’t help but feel victimised for doing a good job over the past 14 years. So, if you ask me, ‘Is Splash compelled to accept an undervalued offer at this juncture?’ The answer is ‘no’. We will say ‘yes’ when the valuation is fair,” he said.
Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili and Selangor Menteri Besar Tan Sri Khalid Ibrahim jointly announced on May 16
that Puncak Niaga’s units, Puncak Niaga Sdn Bhd (PNSB) and Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), had accepted the takeover offers.
The offers value the entire equities, assets and liabilities of PNSB and Syabas at RM2.47 billion and RM3.11 billion, respectively.
This places the water assets of the Puncak group at a combined price-to-book ratio of 4.2 times, a result of the combined equity portion of the offers to both PNSB and Syabas amounting to RM1.56 billion, against a combined net asset value (NAV) of only RM370 million.
AmResearch Sdn Bhd, in a May 19 report, said Splash has a positive book value of RM2.54 billion as at December 2013, but was offered only RM250 million, or 10 per cent of book value, highlighting the inequality of valuation disfavouring Splash based on the current offer.
The Selangor government’s buyout offer to Splash on February 26 this year would result in a huge divestment loss of RM2.29 billion, when measured against its NAV of RM2.54 billion.
The company pointed out that the joint statement by the ministry and the menteri besar highlighted that the federal and Selangor governments were in agreement to review the bulk water supply rate for Splash but no further details had been indicated.
“While we are pleased to hear that Section 114 of the Water Services Industry Act will no longer be invoked, the joint statement was less clear on the respective governments’ intentions with respect to Splash. If they were referring to a unilateral revision of our rates without compensation, then that action is no better than
Section 114 in terms of an act of coercion, and no different to tearing up our contract with the government,” Wan Azmi said.
Nevertheless, from Splash’s point of view, the latest round of lopsided takeover offers by the Selangor government does seem to reward poor governance and penalises those demonstrating sound management, he added. -NST
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