The last hurdle in the Selangor government’s effort to consolidate the state’s water assets are two of the shareholders of SP:ASH – Gamuda and The Sweetwater Alliance Sdn Bhd.
KPS had already accepted the Selangor government offer in March 2014. The Selangor government has a 57.6% stake in KPS.
If SPLASH gets a higher equity value of more than 10% which means KPS will also get 30% of the restated net gains.
To recap, Gamuda had previously stated that the net gain for SPLASH from the Selangor government’s current (June 2014) amounts to rm250 million or just 10% of SPLASH’s equity value of rm2.54 billion.
Based on KPS’s 30% stake in SPLASH, it stands to realsie a net gain of 75.18 million from the rm250.6 million.
If the offer to SPLASH were to be revised higher, KPS may well find its cash coffers expanding substantially.
The divestment of KPS’s property development business in 2013 added rm21.8 million to its war chest. It sold its 56.57% stake in KHSB to KDEB.
Despite the large cash pile, KPS has experienced stagnating earnings growth.
KPS has a 40% stake in NGC Energy Sdn Bhd, which it acquired for rm40 million in June 2012. NGC is involved in the distribution of LPG under the Mira Gas brand, commands a 20% market share.
Apart from the LPG business, KPS is involved in the telecommunications via a 30% stake in Ceres Telekom Sdn Bhd which was acquired for rm24.2 million.
The proposed disposal of its equity in two water operators – SPLASH and Konsortium Abbas Sdn Bhd – would eliminate the bulk of the revenue generated from its infra and utilities division.
Some say that the exit of such a large revenue contributor would make KPS a shell company. This raises the question of whether it should be hoarding the cash to look out for new businesses, instead of returning the proceeds to shareholders.