The Selangor state government is reviewing the second set of clarifications sought by Puncak Niaga Holdings Bhd (PNHB) regarding the state's water asset takeover proposal.
An official from the state government told StarBiz that they had clarified to Puncak Niaga last week on the company's first request for clarifications and was discussing the second set of queries sent by PNHB on Wednesday.
PNHB had told Bursa Malaysia that it was unable to table any proposal to shareholders on the latest RM9bil takeover offer by the Selangor government as it required a clearer bid. It said a decision would only be made after all information was obtained.
Based on a review of the offer documents, PNHB's subsidiaries Puncak Niaga (M) Sdn Bhd and Bekalan Air Selangor Sdn Bhd (Syabas) found numerous ambiguities which required explanation from the state government, especially pertaining to the offer price for the water assets and other issues.
These include the number of shares the Selangor government intends to purchase from the shareholders of Puncak Niaga and Syabas.
ECMLibra Investment Research said in its report: “We are not optimistic on the latest attempt to consolidate Selangor's water industry, taking into account the lower valuations. Furthermore, given that there remain issues to be sorted out between the water players and state government, we are doubtful that a resolution could be achieved by Jan 30, 2011.”
The closing date for the offers remains unchanged on Jan 30.
Based on the details published by PNHB in its announcement, Kenanga Research said the offer price to Puncak was RM2.38, which was lower than the previous offer at RM2.47, which was in June 2009.
“Nonetheless, the offer is based on audited financial statements for the financial year ended Dec 31, 2009, with Syabas ordinary shares only at five million compared with the present 65 million shares. As the offer is still in discussion, we do not expect that this will be the final price,” the research house said in its report.
Meanwhile, Affin Investment Bank does not expect any positive outcome in the near term regarding the offer.
“The Selangor water restructuring, we believe, will likely remain long-drawn for the rest of this year. A potential general election and potential realignment of political parties (between the Federal and state governments) are key re-rating catalysts for this stock,” it said in its report.
An analyst from a local brokerage said it was hard to predict the future developments regarding this issue as the content of the letter remained unknown.
“It looks hard to meet the Jan 30 deadline, given the tight timeline from now. If it is a simple clarification, then it will be easy. However, we don't know to what extent the questions have been raised,” he said.
To recap, the Selangor government had, on Jan 6, revised its offer to take over four water concessionaries in the state, namely, Puncak Niaga, Syabas, Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Selangor Sdn Bhd.
Following that, Puncak Niaga and Syabas issued a letter to the state government on Jan 12 seeking clarification on the identified ambiguities. It issued a reminder to the state government on Jan 18 as it did not receive any feedback within the specified time frame,
Puncak Niaga and Syabas received another letter from the Selangor government on Jan 21, amending one condition of the original offer letter. It received a third letter from the state government on Jan 24, responding to the earlier letter sent by the two companies dated Jan 12.
However, PNHB said the contents of the letter also did not fully address the issues and concerns raised by Puncak Niaga and Syabas. As a result, the companies had reverted to the state government on Jan 26 to seek an explanation, especially on issues arising from the offer documents. - The Star
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