KUALA LUMPUR (Aug 21): Gamuda Bhd said today it has received a letter of offer from Pengurusan Air Selangor Sdn Bhd for the acquisition of Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH).

The offer is to facilitate the restructuring of the water services industry in Selangor, Kuala Lumpur and Putrajaya. Air Selangor has been identified by the Selangor State government to take over the water supply and distribution services in the three areas on a date to be determined.

"The board of directors is currently reviewing the terms contained in the offer and will make the appropriate announcement in due course after going through due process internally," said Gamuda in a filing with Bursa Malaysia today.

Gamuda said the letter of offer, received through its 80%-owned subsidiary Gamuda Water Sdn Bhd, sets out the termination of the existing operations and maintenance agreement (OMA) of the Sungai Selangor Water Treatment Plant Phase 3 (SSP3) between Gamuda Water and SPLASH, as well as settlement of the outstanding Gamuda Water’s receivable from SPLASH via a termination and settlement agreement to be entered into between Air Selangor, SPLASH and Gamuda Water.

Under the termination and settlement agreement, subject to completion of the SPLASH share purchase agreement, SPLASH will pay to Gamuda Water, as full and final settlement of all amounts owing by SPLASH to Gamuda Water under the SSP3 OMA, an amount equal to 90% of the outstanding fee payable under the SSP3 OMA, at a date to be mutually agreed by all parties.

Gamuda said Air Selangor's offer also entails the execution of a new SSP3 OMA between Air Selangor and Gamuda Water. The new SSP3 OMA will commence on the operational date until Dec 31, 2029.

The bulk water supply rates for the new OMA will represent a 2 sen per cu m reduction to the fees under the existing SSP3 OMA. The fees will be 44 sen per cu m from operational date to Dec 31, 2018; 46 sen per cu m from Jan 1, 2019 to Dec 31, 2022; 47 sen cu m from Jan 1, 2023 to Dec 31, 2023; and 53 sen cu m from Jan 1, 2024 to Dec 31, 2029.

SPLASH is a wholly-owned subsidiary of Splash Holdings, in which Gamuda owns a 40% stake while Kumpulan Perangsang Selangor Bhd owns 30%, and the remaining 30% is held by Sweet Water SPV Sdn Bhd, a private investment vehicle of businessman Tan Sri Wan Azmi Wan Hamzah.

SPLASH is the concession holder of Sungai Selangor Water Supply Scheme Phase 1 and 3, which controls about 45% of the treated water supply in Selangor, Kuala Lumpur and Putrajaya.

Gamuda shares closed 12 sen or 3.27% higher at RM3.79 today, with 3.3 million shares done, bringing it a market capitalisation of RM9.35 billion.