S’gor water buyout ‘not reasonable’

water mou

By Farah Adilla, FMT

Puncak Niaga Holdings Bhd and Gamuda Bhd have both said the latest offer by the Selangor state government (SSG) in relation to the state’s water consolidation exercise to buy their water businesses out as “not reasonable”.

Gamuda said the net offer to buy its stake in Syarikat Pengeluar Air Selangor Holding Bhd (Splash) for RM250.6 million will result in a huge divestment loss of RM920 million to Gamuda compared with the net asset value (NAV) of Splash amounting to RM2.54 billion as at Dec 31, 2013. Gamuda has a 40% stake in Splash.

“The offer of RM250.6 million is below 10% of Splash’s NAV. The offer is therefore not reasonable for acceptance by the company.

“The company informed Kumpulan Darul Ehsan Bhd (KDEB) that it is, however, amenable to accepting an offer by KDEB to acquire the equity of Splash upon mutually agreed terms on a ‘willing buyer-willing seller’ basis, based on the following conditions which were already included in KDEB’s earlier offers and accepted by the company,” Gamuda said in a filing to the exchange yesterday.

Meanwhile, Puncak Niaga, in a filing to Bursa Malaysia yesterday, said it set certain conditions before agreeing to the buyout.

Puncak Niaga said, at a special board of directors’ meeting held recently, it is demanding from the SSG an additional 15% per annum compounded return aside from the offer price as compensation for loss of future income as a result of the sale of its water concession business to the SSG.

In addition, the conditions also include any residual cash in both of Puncak Niaga’s subsidiaries — Puncak Niaga (M) Sdn Bhd (PNSB) and Syarikat Bekalan Air Selangor Sdn Bhd — will be paid to Puncak Niaga as this represents the profits attributable to
company, Puncak Niaga said.

“Following the decision of the board, the management of the company has sent a letter to KDEB to inform them of the decision before the 5pm on March 10, as stipulated in KDEB’s offer letters,” it said. The Selangor state’s offer is made through its unit, KDEB.

Meanwhile, SSG’s Kumpulan Perangsang Selangor Bhd (KPS), which owns a 30% stake in Splash, said it has accepted the offer made by KDEB.