It is understood that an offer is likely to be made within the next two weeks to the bond holders, which include Great Eastern Life Assurance (Malaysia) Bhd, CIMB Group, the Employees Provident Fund (EPF) and Kumpulan Wang Amanah Pencen.
"The offer is fair, they [the bond holders] won't profit, and neither will they lose ... it was pretty complex as there are several bonds with different yields and maturity dates, but this offer is fair to say the least," a source told The Edge Financial Daily.
Considering some of the bonds require payments as early as July, the offer period is likely to be a short one.
Splash, for instance, has RM226 million of profit and principal payments due on July 19 under its RM1.41 billion Al-Bai Bithaman Ajil Debt Securities Issuance Facility.
In October 2009, PAAB and CIMB Investment Bank Bhd had signed transaction agreements for Islamic commercial papers and Islamic medium-term notes programmes of up to RM20 billion, which means funding for this acquisition should not be an issue.
Interestingly, it is understood that another two-pronged proposal - to take over the bonds and the assets held by the various water players - had to be scrapped. This has left PAAB with the option of taking over the bonds to control the assets.
"You must understand, the water sector is full of very powerful personalities," the source said.
Among the water players is Puncak Niaga Holdings Bhd, which has two concessions, one as a treatment player under Puncak Niaga (M) Sdn Bhd, and another as a distributor under its 70% unit Syarikat Bekalan Air Selangor Sdn Bhd (Syabas). Puncak Niaga is controlled by Tan Sri Rozali Ismail.
Another company which has a water treatment concession is Syarikat Pengeluar Air Sungai Selangor Holdings Bhd (Splash), which is 40% controlled by construction giant Gamuda Bhd, and 30% each by Kumpulan Perangsang Selangor Bhd (KPS) and Tan Sri Wan Azmi Wan Hamzah's The Sweet Water Alliance Sdn Bhd.
KPS is 60.7% controlled by Kumpulan Darul Ehsan Bhd, the Selangor state investment arm.
The other water treatment concessionaire is Konsortium Abass Sdn Bhd, which is 55% controlled by KPS and 45% by Operasi Murni Sdn Bhd.
In November last year, Minister of Energy, Green Technology and Water Datuk Seri Peter Chin Fah Kui said that the federal government may take over the bonds issued by water concessionaires "if all else fails".
Thus far, all attempts to consolidate the assets have failed, with the Selangor state government in one corner and Rozali and the federal government in another.
In January, the Selangor government made an offer of more than RM9 billion for the water assets.
Prior to that, in April last year, Gamuda made a RM10.75 billion offer to take over the water assets in Selangor. A month earlier, the federal government via PAAB made an offer to acquire all the water assets from the concessionaires for RM8.3 billion.
Back in June 2009, the Selangor government made a combined offer of RM9.2 billion to acquire all the water concessionaires in the state, which was accepted by Splash and Konsortium Abass, but rejected by Syabas and PNSB.
This offer of RM9.2 billion came after an earlier RM5.7 billion offer in February 2009 by the state government was rejected by both Splash and Puncak Niaga's units as being too low.
There are also other pending issues in the pricing of the water assets, such as the valuation of water pipes in Selangor which are owned by the state.
The water sector has been in disarray since Syabas has been unable to pay for the treated water it buys to supply Selangor, Kuala Lumpur and Putrajaya with treated water as per its concession agreement.
Much of Syabas' woes came about after a tariff hike of some 37%, which was slated to take effect in January 2009 as per its concession agreement, did not materialise.
The Pakatan Rakyat state government, which came into power after the March 8, 2008 general election, opposed the hike.
The compensation for Syabas as per the concession agreement has yet to be paid. This compensation works out to about RM36 million a month.
Syabas' parent Puncak Niaga has been receiving soft loans from the federal government to sustain its business. Syabas has sued the Selangor government for RM471.64 million for compensation due to it for the period from Jan 1, 2009 to Dec 31, 2009.
Splash and Konsortium Abass have taken legal action against Syabas, with the issue still pending in court.
After so many offers and counter-offers, it will be interesting to see if the latest proposal will finally break the impasse surrounding the restructuring of Selangor's water assets.- The Edge
No comments:
Post a Comment