Pengurusan Aset Air Bhd's (PAAB) offer to buy up Selangor's water-related bonds have been “well-received” by bondholders, according to reliable sources.
The sources, however, were not able to confirm as at press time if PAAB was able to secure the minimum 75% take-up rate of its offer, which is a condition placed by PAAB.
The offer, which was made via PAAB's unit Acqua SPV Bhd, expired yesterday.
OSK Research analyst for the water sector Vincent Lim said the bondholders were left with little choice but to accept the offer as the bonds were due for repayment very soon.
A file picture shows a Syabas employee checking water pipes in Sepang. The water sector in Selangor is by far the most fragmented in the country.
The structure of the entire offer, reportedly to be valued at about RM6.5bil, is unclear but it is understood that Acqua SPV is buying back the debt papers at par value, which means bondholders are likely to forego any future coupon payment of the bonds.
“That said, the bondholders are better off taking up PAAB's offer as there could be more complications in the state's water sector, and the bonds stand a good chance of defaulting,” Lim said.
So far, the outstanding water bonds that are rated, excluding the ones issued by PAAB, are said to amount to RM6.7bil of the total RM9.02bil issued.
The payment to the bondholders taking up PAAB's offer will be made on June 30.
The bondholders include institutions such as Great Eastern Life Assurance (M) Bhd, CIMB Group Holdings Bhd and the Employees Provident Fund (EPF).
The bonds were issued to spearhead the consolidation of the water industry in Selangor that has been dragging on for more than two years.
Due to the ongoing issues in Selangor's water industry, Malaysian Rating Corp Bhd and RAM Ratings Services Bhd had simultaneously downgraded the ratings of the state's water-related debt issuances as far back as last year on “uncertainness in the operating environment” and “perceived lack of government support” for the sector.
The financial issues of the water companies in Selangor started because they had not received payments from Puncak Niaga Holding Bhd's unit, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), the principal concessionaire in Selangor.
Syabas pays these companies to treat water before it is being supplied to consumers in Selangor, Putrajaya and Kuala Lumpur.
Syabas is cash-strapped because it did not get a 37% tariff hike, which was due in 2009, as the Pakatan Rakyat-led Selangor government claimed that Syabas did not fulfil certain criteria for that hike.
The water sector in Selangor is by far the most fragmented in the country. The main parties involved are the Federal Government, state government and water players, with Puncak Niaga as the core company.
Puncak Niaga is said to be closely linked to Barisan Nasional, which adds political complications to the situation, observers say.- THESTAR
No comments:
Post a Comment