Puncak Niaga, Gamuda say no to offer again

by **Cals** Tue 11 Mar 2014, 08:08

[size=33]Puncak Niaga, Gamuda say no to offer again[/size]

Posted on 11 March 2014 - 05:40am

Rupinder Singh
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[size=14]PETALING JAYA: Puncak Niaga Holdings Bhd and Gamuda Bhd have spurned Selangor state investment arm Kumpulan Darul Ehsan Bhd's (KDEB) latest attempt to consolidate the water sector, consistent with their stand just three months ago.

Kumpulan Perangsang Selangor Bhd (KPSB), a subsidiary of KDEB, however, accepted the offers to acquire its entire equity holding of 30% in Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash) and its 90.83% equity interest in Titisan Modal (M) Sdn Bhd (TMSB), which controls concessionaire Konsortium Abass Sdn Bhd.

In an announcement to Bursa Malaysia yesterday, Puncak Niaga, which holds two concessions, one to treat water under wholly-owned Puncak Niaga (M) Sdn Bhd (PNSB) and another under 70%-controlled Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), reiterated its demand for more information.

Puncak Niaga said although it was "willing to consider the latest KDEB offers", which is identical to the previous offer made, it has once again asked for "certain clarification and confirmations" which is also identical to its previous response to KDEB.

Among the conditions listed in Puncak Niaga's letter to KDEB is a compounded return of 15% a year, instead of the 12% offered, as compensation for the company's loss of future earnings.

It also wants KDEB to remove the arbitration clause in the latest offer "as it violates the spirit of 'laissez faire' since only the rate of return can be arbitrated.

"Such clause on arbitration is unfair to the shareholders of Puncak Niaga including the minority shareholders," the group said, adding that the Federal government which holds one golden share in Syabas had stated that the negotiation must be done on a willing buyer willing seller basis.

Gamuda, which has a 40% interest in water treatment company Splash, said it was constrained from accepting the offer "due to the adverse consequences on the company".

"The net offer of RM250.6 million for Splash when compared to the net asset value (NAV) of Splash amounting to RM2.54 billion as at Dec 31, 2013 will result in a huge divestment loss of RM920 million to the company. The offer of RM250.6 million is below 10% of Splash's NAV. The offer is therefore not reasonable for acceptance by the company," it told the stock exchange regulator yesterday.

Gamuda pointed out that KDEB's previous two offers in July 2009 and February 2013 which it accepted was closer to its NAV valuation of Splash.

It added that it has explained to KDEB that it would not be able to justify such a move to accept such a huge loss to its shareholders which include governmental institutions holding public monies such as the Employees Provident Fund Board (EPF), Kumpulan Wang Persaraan (KWAP), Skim Amanah Saham Bumiputera and other pension funds, foreign investors and the general public.

It also said it will readily submit to international arbitration if it were "used as a device to genuinely resolve the valuation dispute based on internationally accepted methodologies".

To recap, late last month, the Federal Government and Selangor state government signed a memorandum of understanding on the restructuring of the water industry in Selangor, which included construction of the much-needed Langat 2 water treatment plant.

The Selangor government tabled an unchanged offer at RM9.65 billion, but a new feature in the deal was that the federal government will fork out RM2 billion to facilitate the takeover.
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