Puncak Niaga is selling its water assets to Pengurusan Air Selangor for RM1.55bil
KUALA LUMPUR: After seven years of impasse, the water restructuring exercise has finally reached a milestone with the completion of the master agreement on Tuesday and Puncak Niaga Holdings Bhd
could reward its shareholders RM1 a share as cash dividend from the sale of its water assets.
The long-drawn water restructuring deal in Selangor has finally reached its conclusion following the signing of four agreements yesterday between Pengurusan Aset Air Bhd (PAAB) and Pengurusan Air Selangor Sdn Bhd (PASSB).
The four agreements signed are facility agreement, lease agreement, rights of use agreement and settlement agreement.
“We are not surprised with the latest development as both the Federal and state governments have reiterated their commitments to finalise the deal within 60 days from the signing of the supplementary agreement on July 10.
“The signing of the four agreements effectively completes the master agreement and the release of RM2bil from PAAB to PASSB for the acquisitions of Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga (M) Sdn Bhd (PNSB), Konsortium Abass, and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash),” AmResearch said.
The research house said the completion of the deal signalled the long awaited finality of Puncak Niaga Holdings Bhd’s sale of water assets to PASSB for RM1.55bil.
Recall that the sales and purchase agreement to dispose 100% and 70% stakes in PNSB and Syabas, was signed last November.
“We understand that Puncak Niaga is expected to receive the proceeds when the takeover by PASSB is completed. We understand from management that it intends to pay out RM534mil (or RM1 per share on a fully-diluted basis) as cash dividends soon following the completion of the deal,” it added.
AmResearch said Puncak Niaga’s future prospects hinge on the utilisation of RM1bil of the proceeds for either oil and gas or plantation ventures. It maintained a “hold” call and fair value of RM2.80 per Puncak Niaga share as prospects remain cloudy beyond dividend payout.
Following the completion of the water deal, AmResearch expects talks between the state and Splash would shift to a higher gear.
According to media reports, Selangor Mentri Besar Azmin Ali said that the state has begun negotiations with Splash and hopes to conclude a deal by July next year (within a year from the signing of the supplementary agreement).
“We are hopeful that negotiations can be completed in a shorter time frame compared to that for Puncak. We have a ‘buy’ call on Gamuda (fair value: RM5.80/share), which holds a 40% stake in Splash. We estimate the water assets account for RM994mil (40 sen a share) or 6% of Gamuda’s NAV,” AmResearch said.
The research house also expected the Langat 2 project to remain track to completion to 2019 given the commitments by both Federal and state governments.
Last month, raw water was transferred for the first time from Sg. Semantan in Pahang to Sg. Langat in Selangor as part of a mitigation move to maintain the water level at the Sg. Langat dam. The completion of Langat 2 is crucial to ensure water supply sustainability in the state.
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