KUALA LUMPUR: Puncak Niaga Holdings Bhd yesterday announced that it had signed a conditional sale and purchase agreement (SPA) with Pengurusan Air Selangor Sdn Bhd (PASSB), a wholly-owned subsidiary of state investment arm Kumpulan Darul Ehsan Bhd (KDEB).

According to the announcement to Bursa Malaysia, for RM1.55 billion in cash, Puncak Niaga agreed to part with its wholly-owned subsidiary Puncak Niaga (M) Sdn Bhd (PNSB) and the water treatment operator’s cumulative convertible redeemable preference shares, and the 70% stake in loss-making water distributor Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), and its RM212 million nominal value of redeemable convertible unsecured loan stocks.

Puncak Niaga noted that the SPA required the approval of at least 75% of Puncak Niaga’s present shareholders at an extraordinary general meeting to be convened.

Puncak Niaga will set aside RM534.3 million to be distributed to its shareholders. The company, which is controlled by Umno-linked tycoon Tan Sri Rozali Ismail, said the actual amount to be distributed will be announced at a later stage.

Bernama reported that Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Ongkili said the acquisition would pave the way for the next steps to finalise the restructuring of the water supply industry in the Klang Valley.

This was one of the steps in executing the master agreement on the water restructuring signed between the federal government and its Selangor counterpart, along with their relevant agencies, two months ago.

Nonetheless, the master agreement still lacks a major piece of the puzzle, namely Selangor’s largest water treatment operator Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (Splash), as two of its three shareholders rejected the state’s offer as the net gain from the sale was only one-tenth of its book value.

Splash is co-owned by Gamuda Bhd (with a 40% stake) and tycoon Tan Sri Wan Azmi Wan Hamzah’s The Sweet Water Alliance Sdn Bhd (30%). The remainder is held by Kumpulan Perangsang Selangor Bhd (KPS), which accepted the Selangor government’s offer.

KPS also was given four months to complete the sale of its 90.83%-owned water treatment operator Konsortium Abass Sdn Bhd, said Ongkili. “On the other hand, the equity transaction of Splash is expected to be completed within 10 months,” he said, as quoted by Bernama.

This article first appeared in The Edge Financial Daily, on November 12, 2014.