Puncak Niaga, KPSB accept Selangor offer


The concessionaires has agreed to accept the RM9.65 billion general offer made by the state government’s investment firm, Kumpulan Darul Ehsan Bhd.

by Farah Adilla, FMT

Selangor’s water sector restructuring looks set to materialise in the near future after concession holders Puncak Niaga Holdings Bhd and Kumpulan Perangsang Selangor Bhd (KPSB) agreed to accept with conditions the RM9.65 billion general offers made by the state government via its investment arm, Kumpulan Darul Ehsan Bhd (KDEB).

The third party Gamuda Bhd, however, objected to the offer but said it is still willing to hold further discussions with KDEB on the terms of the deal.

In an exchange filing yesterday, the Rozali Ismail-led Puncak Niaga group said it has sent a letter of acceptance to KDEB and is hopeful that the latter will favourably agree to the former’s terms and conditions for the conclusion of the deal.

“Puncak Niaga is hopeful that KDEB will favourably agree to the terms and conditions so the consolidation of the Selangor water industry, envisaged by the federal government and the Selangor state government, which is supported by water players such as Puncak Niaga group, will materialise in the near future,” it said.

Among the conditions listed in Puncak Niaga’s letter to KDEB is a demand for payment of total equity contribution to Puncak Niaga to include a compounded return of 15% per annum taken as compensation for the company’s loss of future earnings as a result of the sale of its water concession business to the state government before the date of expiry of the respective concessions.

Puncak Niaga also demands the payment of debts due and outstanding from Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to Puncak Niaga (M) Sdn Bhd (PNSB) in relation to the supply and sale of water to Syabas as the services had already been rendered.

The company said after a detailed analysis of the offers that it has ascertained that the actual total payable to all water concession holders is far below the RM9.65 billion announced earlier by the state government.

“For instance, in the case of Puncak Niaga, the amount offered to the company for its equity stakes in PNSB and Syabas is only RM1.56 billion and not RM5.59 billion as informed by the Selangor state government.

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

In its letter of acceptance in principle of the offers, Puncak Niaga has requested KDEB to revert within seven days. Pengurusan Aset Air Bhd (PAAB) has only verbally agreed in principle in various official meetings involving the federal government and the Selangor state government on the takeover of the water assets of PNSB and Syabas at RM4.04 billion, the exchange filing said.

Meanwhile, KPSB has accepted the offers in-principle to acquire its entire equity holding of 30% in Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash), which is held via its wholly owned subsidiary Viable Chip (M) Sdn Bhd, and the offer to purchase its 90.83% equity interest in Titisan Modal (M) Sdn Bhd (TMSB), which controls concessionaire Konsortium Abass Sdn Bhd.

The acceptance is conditional upon PAAB acquiring the water assets of Splash at its book value and that any surplus of the book value of the water assets over the liabilities of Splash to be assumed by PAAB shall be payable to Splash.

The amount of receivables due from Syabas and PAAB respectively to Splash and Konsortium Abass shall be verified by an independent auditor and the amount owing by KDEB to KPSB must be fully settled by KDEB.

In respect of the due diligence inquiry that KDEB intends to carry out on TMSB and Abass, the determination of whether the results of such due diligence are satisfactory shall not be a unilateral decision on the part of KDEB, but such determination shall be based on criteria as shall be mutually agreed between KDEB and KPSB.