KUALA LUMPUR: Puncak Niaga Holdings Bhd (PNHB) announced yesterday that the disposal of its water assets to Pengurusan Air Selangor Sdn Bhd (Air Selangor) had been extended for a third time by another month to April 9, 2015.
In a statement yesterday, PNHB (fundamental: 1.5; valuation: 1.2) chief operating officer Datuk Syed Danial Syed Ariffin said the company had agreed to an extension to enable the pending issues — related to the water asset transfer between the Selangor government and federal government — to be resolved.
He said PNHB’s board of directors “expressed concern” that the delay — in completing the proposed disposal of its water assets and consolidation of the Selangor water industry — will affect the level of services and management of the water supply system in Selangor, Kuala Lumpur and Putrajaya.
“This will have direct impact on the interests and welfare of the consumers in Selangor, Kuala Lumpur and Putrajaya as many major decisions on the capital expenditure cannot be implemented — they have been been put on hold by the government, pending completion of the restructuring of the Selangor water industry,” he added.
He said PNHB is confident that Selangor Menteri Besar Mohamed Azmin Ali and Prime Minister Datuk Seri Najib Razak will resolve the issue.
PNHB signed a conditional sale and purchase agreement (SPA) with Air Selangor on Nov 11 last year to dispose of its entire equity interest in Puncak Niaga (M) Sdn Bhd and a 70% stake in Syarikat Bekalan Air Selangor Sdn Bhd (Syabas) to the latter for a cash consideration of RM1.55 billion.
The SPA was meant to fulfil the Selangor government’s intention to consolidate and restructure the water industry in Selangor, Kuala Lumpur and Putrajaya while expediting the construction of the Langat 2 water treatment plant and the distribution system.
Under the SPA, all precedent terms and conditions were supposed to be fulfilled on Jan 12, 2015.
This deadline was, however, first extended to Feb 9, and subsequently to March 9 as the sale of PNHB’s stake in Syabas was still awaiting consent from the Prime Minister’s Department.
The Edge Financial Daily reported on March 9 that the master agreement entered by PNHB and Air Selangor could be rendered void as the Selangor government was unlikely to give a third extension to the master agreement it signed with the federal government.
The master water agreement was signed between former Selangor menteri besar Tan Sri Abdul Khalid Ibrahim and Energy, Green Technology and Water Minister Datuk Seri Dr Maximus Johnity Ongkili last September.
Azmin confirmed this on March 9 and said the federal government had “failed to honour” the master agreement even though Selangor had given ample time for a review.
However, Air Selangor submitted a third extension request to PNHB last Friday, extending the time for the fulfilment of the SPA to April 9.
PNHB closed two sen or 0.78% higher at RM2.60 yesterday with 1.089 million shares traded, giving it a market capitalisation of RM1.08 billion.
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This article first appeared in The Edge Financial Daily, on March 17, 2015.