Thursday, 21 February 2013

Selangor offers fresh RM9.65bil takeover bid to water firms

The Selangor state government on Wednesday made a fresh offer of RM9.65bil to take over all four water concession companies.

All liablities of the companies will also be absorbed by state investment arm Kumpulan Darul Ehsan Berhad (KDEB), which will act as the equity owner, said Mentri Besar Tan Sri Khalid Ibrahim.

He said KDEB sent the offer letters to Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Sdn Bhd, Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Selangor Holding (Splash) on Wednesday.

KDEB will also form a special purpose vehicle to manage the takeover, he said.

In 2009, the state government first made a bid of RM5.7bil but was rejected by all the players. A subsequent offer of RM9.2bil was made in 2011 but it was rejected by Puncak Niaga and Syabas.

"We are confident the (new) offer does not cause the companies to incur losses because the amount reflects a 12% annual return on equity, compared to the usual return of 6% for the water industry.

"Furthermore, all liabilities will also be taken over by KDEB through the special purpose vehicle," Khalid told reporters after chairing the state exco meeting.

The water concession companies have two weeks to respond to the offer.

Khalid said under the Water Services Industry Act, the water services restructuring exercise must be implemented.

"They don't reject (the takeover), (but) they can only question the pricing. They can go for international arbitration if they dispute the pricing," he said.


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