‘A WATERSHED MOMENT FOR SPLASH SHAREHOLDERS’
KUALA LUMPUR: The end of a 10year impasse over Selangor water restructuring is a big win for Syarikat Pengeluar Air Selangor Sdn Bhd (Splash) shareholders, say analysts .
They said Splash shareholders, particularly Gamuda Bhd and Kumpulan Peransang Selangor Bhd (KPS), can expect a windfall from the RM2.55 billion takeover of Splash by Pengurusan Air Selangor Sdn Bhd (Air Selangor).
The RM2.55 billion was a 28 per cent discount over Splash’s net book value of RM3.54 billion as of June 30 this year, said Selangor Menteri Besar Amirudin Shari.
Shares of water-pipe manufacturers rose after Air Selangor tabled the offer to Splash chairman Tan Sri Wan Azmi Wan Hamzah yesterday.
Engtex Group Bhd, YLI Holdings Bhd, Hiap Teck Venture Bhd and Fitters Diversified Bhd were among the stocks that gained.
Water treatment services provider Taliworks Corp Bhd’s shares also advanced, rising four sen, or 3.17 per cent, to close at RM1.30. Splash owes Taliworks some RM638 million in receivables.
Shares of KPS and Gamuda, which own 30 and 40 per cent of Splash, respectively, were suspended ahead of the announcement.
The remaining 30 per cent Splash stake is held by Sweet Water SPV Bhd.
An analyst said the finalisation of the long-drawn issue was not only a win for the shareholders, but also for Selangor people.
“For the past 10 years, people in Selangor had suffered multiple water shortages as a result of this issue, not because of necessity but because of political reasons,” he said.
“Now that the Pakatan Harapan government has taken over, the issue has been finally fixed. Splash shareholders should expect a windfall. We expect to see positive vibes reflected in their shares on Monday after the market has digested the news.”
Another analyst said apart from a RM1.9 billion immediate payment, it was financially sound for all three shareholders to receive the remaining RM650 million over nine years.
“The fact that the payment has been drawn out over the next nine years means that, to a certain extent, all the shareholders will have recurring income. For Gamuda, it would translate well on its bottom line.”
KPS chief executive officer Ahmad Fariz Hassan said the proposed takeover was a step closer not only to a resolution in the Selangor water sector restructuring but also a closure for the company.
“The corporate development is certainly not all loss to the group as we can now focus in executing our business transformation and value creation plans to unlock the full potential of our core businesses, thus creating long-term value and generating sustainable returns for the group,” he said.