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Categories
| S’gor water deals hit dead end |
| Written by Isabelle Francis | |||
| Tuesday, 30 June 2009 10:11 | |||
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This was despite the offer being much improved coupled with the decision to absorb related liabilities of the concessionaires. The rejection by the water players could well mean the end of the state government’s bid to take over the water assets. However, with the state’s abstention in the decision making, Titisan Modal (M) Sdn Bhd, the major shareholder of concessionaire Konsortium Abass Sdn Bhd, agreed in principle to accept the state’s offer of RM946 million for the latter’s assets and liabilities. Interestingly, Titisan Modal is 45%-owned by Operasi Murni Sdn Bhd, a company said to be affiliated to Umno. The state government had, in its letters to the concessionaires, required them to respond to the offers by yesterday. At the federal level, Energy, Green Technology and Water Minister Datuk Peter Chin Fah Kui had ordered negotiations on the restructuring of the water services in the state to be concluded by today. Given the latest development, it is expected that the federal government may no longer be amiable to the state taking a lead role in the exercise but to proceed with its original plan of a nationwide water assets consolidation with Pengurusan Aset Air Bhd (PAAB), like it had done with other states. Analysts now expect the federal government to intervene as they believe the concessionaires are likely to hold out for a better offer from PAAB. However, an industry analyst noted that the minister’s June 30 deadline was not necessarily cast in stone. In a statement yesterday, Puncak Niaga Holdings Bhd said its wholly owned subsidiary, PNSB, and 70%-owned subsidiary Syabas had both rejected the offers. It said PNSB turned down the state’s offer of RM1.94 billion for its assets and liabilities as it could not agree with the valuation method based on one times the assets’ book value as the discounted cash flow method was more appropriate for concession companies. The RM1.94 billion offer — RM887 million for equity plus RM1.05 billion in liabilities — was an improvement on the earlier offer of RM1.61 billion in February. On the offer to Syabas, Puncak said Syabas’ board and shareholders were unable to arrive at a decision in respect of the offer because any proposal to dispense with Syabas’ assets would require the prior written consent of the federal government as the golden shareholder of the concession agreement, and to date, it had yet to receive any instruction. The new offer of RM3.36 billion for Syabas is double the earlier bid of RM1.5 billion. The other shareholders of Syabas are Kumpulan Darul Ehsan Bhd (KDEB) and its 60%-owned subsidiary Kumpulan Perangsang Selangor Bhd (KPS), with a 15% stake each. In a separate statement, Gamuda Bhd said its 40%-owned associate company, Splash, was unable to accept the state’s latest offer of RM2.97 billion (versus RM2.1 billion in the first bid). Splash, too, disagreed with the state’s net asset valuation method and also sees DCF as the appropriate method of valuation. Splash also cited the absence of the state’s firm commitment on the position of the existing operations and maintenance operators. In its statement, KPS said Splash declined the offer as “certain critical issues” had yet to be addressed “satisfactorily”. KPS also said its nominated director in Splash had abstained from the board’s deliberation and decision making. KPS holds a 30% stake in Splash. It also controls 55% of Konsortium Abass, 20% of Taliworks Corp Bhd, and 10% of pipe-maker JAKS Resources Bhd. The Sweet Water Alliance Sdn Bhd, which is controlled by Tan Sri Wan Azmi Wan Hamzah, holds the remaining 30% in Splash. In a separate statement, KPS said Konsortium Abbas’ holding company, Titisan Modal, had in principle accepted the offer price of RM946 million, comprising liabilities of RM779 million and equity value of RM167 million, from the state. It did not say if Konsortium Abass itself had agreed to the offer, but said the board of directors of Konsortium Abass has also sought confirmation from the state government in respect of the structure of the proposed takeover. Apart from Operasi Murni, Titisan Modal’s only other shareholder is KPS, which holds the remaining 55% interest. KPS said given the conflict of interest, its and KDEB’s nominated directors in Titisan and Konsortium Abass had abstained from the decision making. PNSB has several large water treatment plants, while Syabas has the concession to supply water to Kuala Lumpur, Selangor and the federal administrative capital of Putrajaya. Syabas buys treated water from Splash, PNSB and Konsortium Abass. Yesterday, at market close and before the concessionaires made the announcements, Gamuda rose four sen to RM2.77 while KPS gained one sen to RM2.29 but Puncak fell eight sen to RM3.22. This article appeared in The Edge Financial Daily, June 30, 2009.
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