Khalid hits back over Selangor water deal claims

Nov 5, 2016
Former Menteri Besar Khalid Ibrahim said that the state never made such an offer for an "equity takeover" during his tenure.
Former Menteri Besar Khalid Ibrahim said that the state never made such an offer for an “equity takeover” during his tenure.

Foremer Selangor Menteri Besar Khalid Ibrahim denied reports that the Selangor government had offered Syarikat Pengeluar Air Selangor Holdings Bhd (SPLASH) RM2.975bil to take over the water concessionaire during his tenure as the head of state government.

Khalid said that the state never made such an offer for an “equity takeover”.

Azmin, the current menteri besar’s allegations as reported by a few news portals were untrue and misleading, reported by The Star Online as he saying in a statement from Shah Alam today.

He also said that this was “an obvious attempt to divert discussion on the current state administration’s decision to pay SPLASH for an equity compensation a total of RM2.7bil – which is more than 10 times higher than the proposed RM250.6mil as in the final offer”.

Khalid said that while he was mentri besar, the state made a number of proposals to all four concessionaires through its subsidy Kumpulan Darul Ehsan Berhad (KDEB).

This included RM5.709bil in an assets-and-equity takeover on Feb 13, 2009; RM9.218bil in an assets-and-equity takeover on June 25, 2009; and RM9.227bil in an assets-and-liabilities takeover on Jan 6, 2011.

Khalid said that RM9.6516bil was also paid to a fourth group on Feb 20 and Nov 21 in 2013 and Feb 26, Aug 1 and Sept 12 in 2014 for equity compensation based on non-compounded Return On Equity (ROE) of 12% per annum with deductions of any historical dividend payout (RM1.978bil) and for liabilities to be assumed (RM7.6749bil).

He said that the valuation method used for first three groups was “slightly different among themselves”, which explained why “valuations for concessionaires vary under different group”.

Khalid also said that the state government had included the “element of non-compounded ROE of 12% with deductions of any historical dividends” to the fourth group because “we felt that this is a fair deal as that clause was prescribed in the Concession and Privatisation Agreement signed by all concessionaires including SPLASH”.

He said that the government never considered paying SPLASH RM2.9bil for equity alone under any circumstances.

“While we used various valuation methods, the valuation for equity was not much different.

“In our final offer, we arrived at RM250.6mil for equity compensation while assuming its RM1.584bil liabilities as the fair value for SPLASH,” he said.

Khalid added that SPLASH had paid out a total of RM725.4mil in dividends while Syarikat Bekalan Air Selangor (Syabas) had paid none to its shareholders, which explains why the payment for equity compensation between the two differs greatly.

On the allegation that he had “hidden the non-existent RM2.975bil offer to SPLASH from the state legislative assembly”, Khalid said that he had no reason to hide offers made by the state as all decisions were presented before the state exco and the legislative assembly “whenever possible and necessary”.

He said that as the water restructuring deal involved several public listed companies (PLCs), it would have been impossible not to disclose any details that could have a “material impact on these PLCs” to Bursa Malaysia and other relevant authorities.

Meanwhile, Khalid said that his office held numerous press conferences and issued hundreds of press statements on the water restructuring matter.

He said that his office also hosted various briefings for state assemblymen and MPs who had also campaigned to raise public awareness on issue.

“We were also very meticulous on our presentation to the state legislative assembly and I am confident that the hardworking government officers especially State Economic Planning Committee (Upen) can vouch for that,” said Khalid.

He added that the “whole takeover sum” cannot be more than RM9.65bil as it will affect future water tariffs and efforts to bring down non-revenue water in Selangor.

“The fact that the state is seriously considering paying SPLASH an extra RM2.45bil is an act of betrayal to the rakyat’s trust,” said Khalid.