Analysts believe that the stumbling block remained the compensation payable to Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), a 70%-owned subsidiary of Puncak Niaga Holdings Bhd, as the former’s concession would be terminated after the acquisition.
Gamuda had told Bursa Malaysia on Tuesday that the revised offer still stood at RM10.75bil but with the water assets to be parked under the Federal Government’s Pengurusan Aset Air Bhd (PAAB) to comply with the asset light policy under the Water Services Industry Act 2006.
Splash would then lease the assets from PAAB at a rental rate of 6% per year with an annual escalation of 2.5% under a 30-year operating licence.
Currently, the state’s water assets are parked under four concessionaires – Syabas, Splash, Puncak Niaga (M) Sdn Bhd and Konsortium Abbas Sdn Bhd.
Looming over the takeover of Selangor’s water assets, which has been ongoing for the past two years, is a water tariff hike. The increase was initially supposed to be implemented in January last year, then deferred to March but has yet to happen due to the issues surrounding the takeover.
An analyst with a local investment bank said this arrangement would not be very attractive to Puncak Niaga as the company was also looking to obtain the licence to operate and maintain the state’s water infrastructure.
“The offer price will have to reflect some form of compensation for Syabas’ loss of the concession, which in effect means Puncak Niaga exiting the business,” he told StarBiz.
OSK Research Sdn Bhd analyst Vincent Lim agreed, saying the compensation issue would have to be resolved or further talks would not get anywhere.
He said one option was for PAAB to make a higher offer.
Lim said in a report yesterday the revised offer only involved a net book value pricing for Syabas’ water assets but did not take into account the compensation payable to the company from the loss of future profits.
“Although the new offer is favourable to Splash in terms of a lower capital outlay and it being an asset light licensing model, we think that Puncak Niaga, as an indirect party to the offer, will not agree to the terms as it does not make clear Syabas’ compensation status should its concession operation cease after the restructuring,” he said.
AmResearch Sdn Bhd analyst Mak Hoy Ken said in a report that the possibility of other water entities including Puncak Niaga directly negotiating with PAAB to migrate their water assets and liabilities could not be precluded should the former not take up Splash’s offer.
He added that the valuation basis for Splash’s offer had yet to be ascertained nor had there been a specific timeline mentioned.
Mak said the deal would still need the approval of the stakeholders of the state’s fragmented supply chain including the Selangor government, which holds 30% of Splash, 55% of Konsortium Abbas and 30% of Syabas.
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