Shareholders of Syarikat Pengeluar Air Selangor Holdings Bhd (Splash) are likely to accept the offer from the Selangor state’s Kumpulan Darul Ehsan Bhd (KDEB), executives familiar with the matter tell KiniBiz.
Sources said that at a meeting this afternoon, executives from Splash’s shareholders-namely Gamuda Bhd which has a 40 percent stake in Splash, Kumpulan Perangsang Selangor Bhd (KPS which is 60.55 percent controlled by KDEB) and Sweetwater SPV Sdn Bhd controlled by Wan Azmi Wan Hamzah- agreed in principle to the offer of RM1.8 billion cash, comprising RM1.6 billion for water assets and RM251 million for the equity.
“We should accept it next week. We clarified some minor issues with PAAB (Pengurusan Aset Air Bhd – the water management corporation), and we feel it’s a good offer,” a Splash official said on condition of anonymity.
Previously, Splash’s officials were pondering a clause in the offer letter which read, “PAAB to decide on payment of surplus book value of assets over liabilities, and if agreeable, to be paid by PAAB direct to applicable concessionaires.”
This payment of surplus is advantageous to Splash, as it has low borrowings compared to its assets.
A check with the Companies Commission of Malaysia (CCM) indicates that Splash as at end March last year posted a pre-tax profit of RM470.33 million on the back of RM373.05 million in revenue.
Splash had non-current assets of RM4.17 billion and current assets amounting to RM473.39 million, while on the other side of the balance sheet the water treatment operator had RM2.08 billion in non-current liabilities and RM582.77 million in current liabilities.
“We checked with PAAB, and the surplus of book value of assets over liabilities will come back to us…so we feel it’s a good deal,” the executive added.
Thus with two out of three water treatment players- Splash and Konsortium Abass Sdn Bhd, which is almost wholly owned by the state in acceptance of the offer- the stumbling block remains Puncak Niaga Holdings Bhd, the flagship of politically connected businessman Rozali Ismail.
Puncak controls 70 percent of Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), while the remainder 30 percent is owned by KPS. Syabas has the mandate to supply treated water to Selangor, Kuala Lumpur and the federal territory Putrajaya.
Under its belt Puncak other than Syabas, also wholly owns water treatment outfit Puncak Niaga (M) Sdn Bhd.
This offer by the state valued at RM9.65 billion is the state’s fourth.
While KDEB’s offer for Konsortium Abass is pegged RM992. 2 million, its offer for Puncak is in the region of RM6.8 billion.
Rozali is a former treasurer of Umno Selangor and has been opposing the opposition-led state’s advances to consolidate the fragmented water industry. Rozali’s contention has been that he requires some direction from the Federal Government which has a golden share in Syabas.
More recently Puncak has been developing its oil and gas arm, which some say could nudge Rozali to part with his water assets if the right price is offered.
Puncak ended trading at RM1.35 on Monday, inching up one sen.