Acqua SPV Bhd has acquired 99.6 per cent of Selangor water bonds amounting to RM5.8 billion in nominal value, Pengurusan Aset Air Bhd (PAAB) Chief Executive Officer Datuk Faizal Abdul Rahman said Thursday.
The bondholders would be paid according to bond maturities by June 30, he said after the signing of the Penang State Water Supply Restructuring Agreement here.
PAAB, through Acqua SPV, made the offer to buy the bonds on May 20 to the existing bondholders of Syarikat Bekalan Air Selangor Sdn Bhd, Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd, Puncak Niaga Sdn Bhd, Titisan Modal Sdn Bhd and Viable Chip Sdn Bhd under seven bond programmes.
Faizal said the offer took into account various factors such as the ratings, current yields, coupon structures and levels of liquidity of the bonds.
"We are confident in achieving the 100 per cent target within this week, pending official confirmation from several bondholders who have given positive indication earlier," he said.
Meanwhile, Acqua said in a statement that the exercise was seen as an interim measure to consolidate the assets and liabilities of the water operators whilst negotiations between the federal government and the Selangor state government on the restructuring of the state water industry continue.
This acquisition, however, will not relieve any existing obligations of the issuer under the current terms and conditions of the respective bond programme.
Acqua SPV is merely taking over the ownership and role of the existing bondholders.
It explained that the protracted negotiations between the federal government and the Selangor state government on the restructuring of the water industry in the state had resulted in the deterioration of the cash flows of the water concessionaires, seriously jeopardising the ability to service the bonds.
The credit deterioration had caused severe downgrades of the bonds rating which in turn, had negatively impacted the financial institutions' balance sheet due to the impairment in the bond values.
"If the situation remained unresolved, the risk of imminent default is high," Acqua SPV said.
Any default of any of these bonds may result in cross-default across the board and may lead to a systemic meltdown of the Malaysian capital markets and erode investors' confidence locally and internationally.
It would also impact PAAB's and the federal government's ability to raise funds for existing and future infrastructure projects at competitive pricing.-- BERNAMA
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