KUALA LUMPUR: Gamuda Bhd
's 80%-owned subsidiary, Gamuda Water, has received a new O&M agreement (OMA) for the Sungai Selangor Water Treatment Plant Phase 3 (SSP3) post acquisition of SPLASH.
It also received a letter of offer regarding the settlement of outstanding receivables arising from its operations of SSP3.
PublicInvest Research said the development is positive as it confirms Gamuda Water's continued provision of O&M services to SSP3 and the recovery of about RM400mil receivable owed by SPLASH.
"The letter of offer spells out the termination of the existing operations and maintenance agreement of the Sungai Selangor Water Treatment Plant Phase 3 (SSP3 OMA) between Gamuda Water and Splash and settlement of the outstanding Gamuda Water’s receivable from Splash vide a termination and settlement agreement to be entered into between Air Selangor, Splash and Gamuda Water; and the execution of a new SSP3 OMA between Air Selangor and Gamuda Water," said PublicInvest.
"Subject to completion of the Splash SPA, Splash will pay to Gamuda Water, as full and final settlement of all amounts owing by Splash to Gamuda Water under the SSP3 OMA, an amount equal to 90% of the outstanding fee payable under the SSP3 OMA, and the new SSP3 OMA shall commence on the Operational Date until 31 December 2029 with 2 sen reduction to existing bulk supply rate."
New fees apply under the new OMA, which represent a reduction of about 2 sen per cubic metre to the free under the existing SSP3 OMA, or an average discount of 4% from the original rates or two sen reduction across the board.
The research house said it is keeping earnings unchanged pending more details but it believes the impact should be minimal. It maintained its neutral call and target price at RM3.80.
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