Published February 16, 2009

Selangor offers RM5.18b buyout of 3 water firms

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(KUALA LUMPUR) Three water companies in Selangor have been offered a combined RM5.18 billion (S$2.17 billion) to give up their assets and concessions to the state government, says a report in Malaysia's Business Times.

Gamuda Bhd's 30 per cent owned Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) got a RM2.06 billion offer, while Puncak Niaga Holdings Bhd's two water firms may get a total of RM3.12 billion.

Puncak Niaga (M) Sdn Bhd (PNSB) got a RM1.61 billion offer, while Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) was offered RM1.51 billion.

The offer letters were dispatched to the companies on Friday, Gamuda and Puncak Niaga said in separate statements.

Puncak Niaga wholly owns PNSB and holds a 70 per cent stake in Syabas.

The Selangor government also sent an offer letter to another water concessionaire as it tries to meet the March 31 deadline requested by the federal government to restructure the state's water sector.

The other firm is Kumpulan Darul Ehsan Bhd's subsidiary Konsortium ABASS Sdn Bhd (Abass). But no statement was made by KDEB as of Friday.

Gamuda and Puncak Niaga said that the state government would pay cash without assuming any debt or other liabilities from their concession outfits.



The three concessionaires have until Feb 20 to make a decision before negotiations for a firm pact can be conducted properly with the offeror.

The offer prices were based on a valuation of the water assets of Abass, PNSB and Syabas as at Dec 31, 2007. This is by combining the companies' asset value with equity value and subtracting the dividend.

In the case of PNSB, the asset and equity value were RM1.14 billion and RM543.05 million respectively, while dividend was RM75.33 million.

Syabas's asset and equity were assessed at RM1.09 billion and RM424.0 million respectively, while its dividend was zero.

Abass, meanwhile, has asset value of RM1.95 billion, equity value of RM687.51 million and dividend of RM578.62 million.

Meanwhile, Puncak Niaga is likely to reject the offer by the state government to buy out its water assets, Reuters reported a newspaper as saying on Saturday.

Puncak Niaga is likely to turn down the offer because Pengurusan Aset Air Bhd (PAAB), a federal government agency, is expected to make a more generous bid for the assets, The Edge Weekly reported, citing an unidentified source.

'Puncak will likely hold out for a better offer from PAAB,' The Edge quoted the unnamed source as saying. Puncak Niaga officials could not be immediately reached for comment.

The opposition-controlled Selangor state government has said that the offer was aimed at derailing the federal government's efforts to take over the state water industry and impose higher prices.