KUALA LUMPUR (Dec 4): Malakoff Corp Bhd’s business partner in an Algerian sea water desalination plant — state-owned Algerian Energy Co (AEC) — wants the group to give up its stake in the plant operator following the termination of a water purchase agreement.

Malakoff's 70%-owned Tlemcen Desalination Investment Co SAS (TDIC) currently holds a 51% stake in the joint stock company Almiyah Attilemcania SPA, under which the plant is parked. The remainder 49% is held by AEC, the government company that handled the power and water privatisation exercise in Algeria.

Malakoff said AEC notified TDIC and the offtakers of its decision to transfer TDIC's shares in the joint stock company to AEC on Nov 30.

The offtakers are Sonatrach SPA and L'Algerienne Des Eaux, whom Malakoff announced mid last month had sent a notice to terminate the water purchase agreement inked on Dec 9, 2007, following an alleged breach of agreement. L'Algerienne is the state-owned national public water entity of Algeria, while Sonatrach is the national oil company of Algeria.

In the share transfer notice issued, AEC also said it intends to carry out a technical appraisal on the plant.

Malakoff said TDIC may dispute the validity of the notice in the seven days after receiving it.

“TDIC will be seeking legal advice and taking the necessary steps to challenge the purported notice issued by AEC,” Malakoff said.

Malakoff also said its carrying amount of investment in AAS had been fully provided for in financial year ended Dec 31, 2016 (FY16). Hence, it does not expect any material impact from the latest development on its earnings, net assets and gearing for FY18.

Malakoff shares closed unchanged at 79.5 sen today, giving it a market capitalisation of RM3.89 billion.