Puncak Niaga's water assets sale not a concern

PETALING JAYA: AmResearch is unperturbed by the extension until Feb 9 of fulfilling conditions precedent in the disposal of water assets to Pengurusan Air Selangor Sdn Bhd (PASSB) by Puncak Niaga Holdings Bhd.
In a research note yesterday, AmResearch analyst Max Koh said some of the terms and conditions would need time to be fulfilled.
"In our checks with management, we understand that these are mainly procedural issues and would not derail the completion of the disposals," he added.
Koh believes the water deal will eventually be completed given the commitment by all parties and the necessity to ensure sustainable water supply to the Klang Valley.
The conditions precedent stated in the sale and purchase agreement include unconditional approvals by the Federal government; unconditional approvals of ACQUA SPV Bhd and the respective trustees of bonds issued by Puncak and Syabas; execution of agreement between the Selangor state and PASSB for the transfer of water assets, as well as the master agreement, and lease agreement between PASSB and Perbadanan Aset Air Berhad (PAAB) for the leaseback of water-supply assets; and the receipt of disposal consideration from PAAB to PASSB.
Last week, Puncak Niaga yesterday received shareholders' nod for the disposal of 100% stake in Puncak Niaga (M) Sdn Bhd and 70% stake in Syarikat Bekalan Air Selangor Sdn Bhd for a total of RM1.56 billion.
Koh believes if all things go well, the disposals should be completed by the first quarter of 2015 with dividends of RM1 per share to be paid by June.
He is maintaining a "hold" call on Puncak until further clarity of the group's future plans beyond the dividend windfall.