The federal government has denied that its attempt to take over Selangor's water bonds was a move to bail out industry players, said Energy, Green Technology and Water Minister Peter Chin.Chin said that the bid for the bonds was a mitigation attempt to stabilise Selangor's water services industry and avoid negatively affecting the capital market.
“I wish to stress that there is no 'bailout' element as alleged by the opposition in the attempt to take over the bonds,” he said.
Yesterday, StarBiz reported that federal government unit Pengurusan Aset Air Bhd (PAAB) had set up Acqua SPV Bhd to make an offer for the water bonds, based on the relevant purchase yield to maturity. Bondholders have until 5pm on May 31 to agree to the terms set by Acqua SPV.
Chin explained that Acqua SPV Bhd will negotiate with bondholders directly on the quantum and thus the takeover of the bonds would be done through the open market and not by the federal government.
“I wish to stress that the takeover does not mean Selangor water companies who issued the bonds are released from their obligations to pay back their liabilities prior to the takeover by Acqua SPV.
“Thus if the Acqua SPV's bid is successful, the takeover should be looked at as a change in investors from current bondholders to only Acqua SPV,” he said.
Chin: Move might stabilise water tariffs
Chin said that once this move was completed it would stabilise the water services industry and allow the federal government to concentrate on its negotiations with the Selangor government on the water restructuring exercise. “Meanwhile, by reviewing the structure and terms of the bonds, there is a possibility that this would ensure the stability of water tariffs in the future,” he said.
The Najib Abdul Razak administration has been under pressure by bondholders, which includes major banks, to buy up the bonds which has been heavily downgraded by the rating agencies. According to StarBiz yesterday, an offer of RM6.5 billion will be announced by the federal government, against the issued value of RM9.02 billion.
Water bondholders are caught in a bind because Selangor's four water players - Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Sdn Bhd (PNSB), Syarikat Pengeluaran Air Sungai Selangor Sdn Bhd (Splash) and Konsortium ABASS - are unable to pay bondholders.
Syabas is blaming the state government for refusing its contractual demand for a 37 percent increase in water tariff, on the grounds that the company had not fulfilled its contractual obligations to reduce non-revenue water and other leakages.
'Feds forced to act'
However, there is a political element to this deadlock. The federal government is bent on nationalising all water assets, a move which Pakatan-ruled Selangor argues would inadvertedly cause a massive hike in water tariff. Selangor is instead insistent that Syabas - which is heavily linked with Umno - accepts the state's acquisition offer in order for the concession agreement to be restructured before the federal government is allowed to come in.
Meanwhile, Chin said that the federal government welcomes Selangor's willingness to return to the negotiation table to resolve the deadlock. “However, negotiations are expected to be prolonged should Selangor refuse to consider other models.
“As long as there are no proposals that are more practical by Selangor to resolve this issue, the federal government is forced to take the necessary measures to resolve problems that crop up,” said Chin in reference to the water bonds.
Tax payers made to pay yet again
In an immediate reaction, Charles Santiago, a member of Selangor government panel to negotiate on the water industry restructuring with the federal government, insisted that the buy up of the bonds was a clear bail out. He said that when a government privatises a utility, it is always done with the expectations that a private company has the funds, expertise and competency to rune it effectively.
“Now we have a case where there are companies which have failed in their obligations to pay the bondholders and the cost is being passed to the tax payers,” said Santiago, while describing such companies as irresponsible.
He said that the only viable solution now is for the federal government to convince the four companies involved to take up the state government's acquisition offer. This would allow the state to restructure the companies, a move which Santiago explained was heavily opposed by the federal government for their own interest.
“We have presented numerous proposals, but the federal government is bent on maintaining the status quo,” said Csantiago, who is also the MP for Klang.
source:malaysiakini
Takeover and bailout bagi geng2 'pandikutty' sama maksudnya. Acqua SPV ini milik siapa?
cheers.
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