Now the time-lines are getting shorter. Debts would have to be paid.
Today the Malaysian Rating Corporation (MARC) got into the act as well. It put all the players involved in the Selangor Water Sector under “ Negative Watch” as there seems to be no “development to the restructuring exercise”.
Hopefully, this dampener will wake up those players which are ‘reaching the end of the rope. With no more rope to hang onto any more, maybe they will give in to the Splash offer to take over all the disparate water concessionaires in Selangor at RM10.75 billion. The State of Selngor’s earlier offer was RM9.2 billion.
Splash’s bid preseumably was backed by the Federal government after a revised offer in April which saw the participation of Pengurusan Aset Air Bhd (PAAB), in compliance with the asset-light condition spelled out under the Water Services Industry Act.
Under the deal offered by Splash, PAAB would pay RM8.1bil for the assets to be topped up with RM2.6bil from Splash.
What will be the negative effects of being put under ‘negative watch’?
For one, it definitely affects debt papers issued by Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga (M) Sdn Bhd, Puncak Niaga Holdings Bhd, RUN Holding SPV Bhd, Syarikat Pengeluar Air Sungai Selangor Sdn Bhd, Viable Chip (M) Sdn Bhd and Titisan Modal Sdn Bhd.
The concerns are real. The inability to restructure will result in Syabas’ continued inability to meet in full its monthly bulk water payment obligations to water-treatment operators as the result of the former’s unresolved water tariff hike.
Let us watch whether this MARC action will spur some players into action.
Also the Pahang-Selangor Water Transfer Project is on-going and should provoke players to look at the bigger picture of a win-win situation for all.
Meanwhile, you can start collecting shares like KPS,KHSB and JAKS at fairly low prices now!
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