KUALA LUMPUR (Aug 27): Taliworks Corp Bhd said today it has decided to accept the settlement offer from Pengurusan Air Selangor Sdn Bhd (Air Selangor), as part of the latter's acquisition of Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH).
In a filing with Bursa Malaysia today, Taliworks said its wholly-owned subsidiary Sungai Harmoni Sdn Bhd has resolved to accept the offer from Air Selangor.
"Sungai Harmoni expects to commence negotiations with Air Selangor to finalise the terms and conditions for the termination and settlement agreement and the new operations and maintenance agreement (OMA) to be executed by the parties.
"An appropriate announcement will be released in due course upon the execution of the agreements," it added.
On Aug 21, Sungai Harmoni had received a letter of offer from Air Selangor, where the former was required to revert with the acceptance of the offer by today (Aug 27).
The offer sets out the key terms of settlement between Air Selangor, SPLASH and Sungai Harmoni relating to Sungai Harmoni's outstanding receivables arising from its existing operations and maintenance of the Sungai Selangor Water Treatment Plant Phase 1 (SSP1), as well as the key terms in respect of the new OMA between Air Selangor and Sungai Harmoni.
To facilitate the conclusion of the water restructuring exercise, Sungai Harmoni is requested to enter into a termination and settlement agreement with Air Selangor and SPLASH in respect of its existing OMA for SSP1 and enter into a new one. It is also required to terminate all other existing agreements relating to the SSP1 OMA.
Under the termination and settlement agreement, subject to completion of the SPLASH share purchase agreement, SPLASH will pay to Sungai Harmoni — as full and final settlement of all amounts owing by SPLASH to Sungai Harmoni under the SSP1 OMA — an amount equal to 90% of the outstanding fee payable under the SSP1 OMA, at a date to be mutually agreed by all parties.
The settlement sum will be paid via an upfront payment of 10% of the settlement sum no later than 14 days from the operational date, and nine subsequent equal annual instalments.
Interest will be payable annually in arrears on the remaining settlement sum which remains outstanding, at the rate of 5.25% per year.
Meanwhile, the bulk water supply rate (BSR) under the new OMA will be a rate equal to a 5 sen per cu m reduction to the existing BSR under the SSP1 OMA from the operational date to Dec 31, 2029, being the expiry date of the existing SSP1 OMA.
For the seven-year extension from Jan 1, 2030 to Dec 31, 2036, the BSR rate will be 52.5 sen per cu m for the operations and maintenance of the SSP1 by Sungai Harmoni.
Air Selangor is the entity identified by the Selangor state government to take over the water supply and distribution services in Selangor, Kuala Lumpur and Putrajaya.
Taliworks shares ended the morning session up one sen or 0.81% at RM1.25, with 1.83 million shares done, bringing a market capitalisation of RM1.52 billion.