RM9.65 BILLION Selangor water deal hits snag, again

KUALALUMPUR - The Selangor government’s latest RM9.65 billion offer to fully take control of all four water concessionaires in the state has hit roadblocks again.

At the end of its offer deadline yesterday, concession holder Gamuda Bhd rejected the offer, although Puncak Niaga Holdings Bhd did conditionally accept the bid.

Gamuda said it was unable to consider the takeover offer because the valuation methodology “is not fair”.

The group, which holds the concession through Syarikat Pengeluar Air Selangor Holdings Bhd (Splash), said it would seek further
clarification.

Meanwhile, Puncak Niaga — which holds two concessions via Puncak Niaga (M) Sdn Bhd and Syarikat Bekalan Air Selangor Sdn Bhd
(SYABAS) — announced that it had accepted the offer but with conditions.

The state’s fourth concessionaire is Konsortium Abbas Sdn Bhd, which is majority-owned by Selangor government’s investment arm
Kumpulan Darul Ehsan Bhd (KDEB).

Puncak Niaga said it is hopeful that the state government will favourably agree to its terms and conditions so that the consolidation of the state’s water industry will materialise.

“As a socially conscious corporation, we also do not wish to see the long-drawn consolidation delayed further since the first offer from the Selangor government was far back in 2009.

“The entire water saga has affected all parties from consumers to housing developers and certainly will affect foreign direct investment and the economic growth of the state,” Puncak Niaga said in a statement to Bursa Malaysia.

Puncak wants more

The Selangor government had proposed its unit KDEB to buy 100 per cent of PNSB and 70 per cent of SYABAS.

Puncak Niaga is not happy with the effective offer of RM1.55 billion for its SYABAS and PNSB stakes and not RM5.59 billion as informed by the state government previously.

“We are of the view that the manner in which the offers were presented to the public by the Selangor government is misleading and detrimental to all shareholders of Puncak Niaga.

“We have also observed that the several offers which the Selangor government has made to date tend to be ambiguous and require a lot of clarifications and confirmations, whereas the concession holders are expected to respond within a very short time,” it said.

Puncak Niaga said it had conveyed its general acceptance in principle of the offers subject to:

• The total equity contribution to be paid to Puncak Niaga should include a compounded return of 15 per cent per year taken as compensation to Puncak Niaga for the loss of future earnings as a result of the sale of its water concession business to the Selangor government before the date of expiry of the respective concessions;
  
• The debts due and outstanding from SYABAS to PNSB at the effective date, in relation to the supply and sale of water to SYABAS, should be paid to Puncak Niaga as this services had already been rendered;
  
• Any and all residual cash in PNSB (inclusive of above) and SYABAS shall be paid to Puncak Niaga as this represents the profits attributable to Puncak Niaga;
  
• Removal for the requirement of due diligence post-acceptance of the offers in order for the offers to be completed as quickly as possible; and,
  
• Waiver of the requirement for the acquisition of the water assets by federal government’s Pengurusan Aset Air Bhd (PAAB) to be undertaken concurrently with the acquisition of the equity by KDEB.
  This is because, since KDEB is acquiring the equity of the water concession companies, the concession holders should be paid first on the agreed price by KDEB, and KDEB can then separately settle its arrangement with PAAB for it to take over the water assets and borrowings. - BT