Source: NEW STRAITS TIMES, 3rd October 2007

KDEB is offering to buy out Gamuda and The Sweet Water Alliance as part of its plan to consolidate the fragmented water industry, a source says

KUMPULAN Darul Ehsan Bhd (KDEB) is offering to buy the remaining shares it does not already own in water producer Syarikat Pengeluar Air Selangor Holdings Sdn Bhd (Splash), sources say.

Currently, Splash's shareholders are Gamuda Bhd with a 40 per cent interest and the rest of the stake are equally divided between The Sweet Water Alliance Sdn Bhd (TSWA) and KDEB.

"KDEB wants to tighten its grip on Splash ... it is offering to buy out Gamuda and TSWA from Splash. This is part of its plan to consolidate the fragmented water industry," a source said.

However, it is unclear how much KDEB has offered. A KDEB official did not deny the story when contacted.

"KDEB is strengthening its position as a key water player in the region," Necia Abdullah, general manager for corporate communications told Business Times.

Splash is the largest water producer in Selangor, producing 2,000 million litres a day, or 43 per cent of the state's total water supply. Its 30-year concession runs until December 31 2030.

Last year, Gamuda bought an extra 10 per cent in Splash from The Sweet Water Alliance for RM135 million. TSWA is a privately-held firm controlled by businessman Tan Sri Wan Azmi Wan Hamzah.

Currently, Selangor has three water treatment concession holders. They are Puncak Niaga Holdings Bhd, Splash and Konsortium Abass Sdn Bhd (ABASS).

Selangor's water distribution concession, however, is held by Puncak Niaga's subsidiary, Syarikat Bekalan Air Selangor Sdn Bhd (Syabas).

The bulk of KDEB's water assets is under its flagship listed unit, Kumpulan Perangsang Selangor Bhd, which has a 30 per cent stake in Splash and a 55 per cent stake in ABASS via Titisan Modal (M) Sdn Bhd and Taliworks Corp Bhd.

It is understood that KDEB will use KPS, in which it has a 53.9 per cent stake, to place the state's water sector under the control of a single unit.

Splash manages the Sungai Selangor Phase 1 and 3 water supply scheme, while ABASS controls the Sungai Semenyih water supply scheme.

"It all boils down to the price," another source said.

"If KDEB is able to conclude the deals with Gamuda and TSWA, it will have to assume all the borrowings Splash had incurred," he added.