KUALA LUMPUR (Sept 15): Puncak Niaga Holdings Bhd may consider the possibility of terminating the agreement with Pengurusan Air Selangor Sdn Bhd (PASSB), if there is a further extension in addition to the one given until Oct 15 (from Sept 14) for the completion of its water sale.

In a note today, AmResearch wrote that Puncak Niaga will seek various avenues to protect its rights and its shareholders’ rights, including the right to seek legal recourse against PASSB, if there is a another extension.

“Following the signing of four agreements between PASSB and Pengurusan Aset Air Bhd (PAAB) last week, we are hopeful that Puncak’s water deal can be completed within the expected timeframe,” analyst Max Koh said in the note.

It was reported that the four agreements — facility agreement, lease agreement, rights of use agreement, and settlement agreement — are essentially conditions precedent to effect the master agreement signed a year ago.

According to Koh, PASSB is then expected to take over Puncak Niaga Sdn Bhd (PNSB) and Syabas within two weeks and Konsortium Abass within the next four months.

“Recall that Puncak Niaga will receive RM1.55 billion in proceeds when the takeover by PASSB is completed. Following that, we expect the payment of RM534 million or RM1 per share on a fully-diluted basis, as cash dividends to be made by year-end,” Koh said.

Notwithstanding the latest update, AmResearch said it remains hopeful that the water deal with Puncak Niaga will be completed soon.

Koh added this is premised on “the commitment by both the federal and state governments to complete the exercise soon and ensure water supply sustainability, and as it is, the treated water reserve margin in the state is already below 1%, while non-revenue water is 32%.”

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