Source: NEW STRAITS TIMES, WEDNESDAY 3rd October 2007

The tycoon is said to be planning to part with his concessions, Equiventures and Southern Water Corp, for RM3.40 a share, taking into account the future revenue that they will generate.

TAN Sri Syed Mokhtar Al Bukhary plans to sell his water concessions in Johor at almost triple their book value, based on a state-led plan to group water assets under one roof.

The tycoon will part with his concessions for RM3.40 a share, people close to him said.

This value takes into account the future revenue that they will generate over their lives. In contrast, its net tangible asset value is RM1.29.

State authorities were supposed to take control of Equiventures Sdn Bhd and Southern Water Corp Sdn, some six months ago, but negotiations reached breaking point due to pricing.

The two companies are units of public-listed Aliran Ihsan Resources Bhd.

Documents seen by Business Times revealed that the state has set up Johor Special Water Sdn Bhd (JSW), a special purpose vehicle to buy the two companies under Aliran.
   

The Johor state government had agreed to buy the water assets as part of a wider agreement in December 2005 with SAJ Holdings Sdn Bhd.

That agreement also included the deferment of a planned water tariff increase in 2003 to this year.

After buying Equiventures and Southern Water, JSW plans to lease them to SAJ Holdings for RM1.05 billion.

Payments for the lease will be made over an 11-year period that ends on 2025.

The agreement had stymied a later offer by Syed Mokhtar to extend his concessions for another 17 years in return for lowering the price it sells water to the state.

Syed Mokthar gained control of Aliran by injecting Equiventures and Southern Water for RM384 million, in a reverse takeover of financially-distressed RNC Corp Bhd.

Aliran, sired from the 2005 scheme, emerged with a 209 million share capital spread at RM1 par value, and a seven-year RM56.9 million Redeemable Convertible Unsecured Loan Stocks.

Aliran, which supplies 70 per cent of Johor's treated water, posted a net profit of RM21.34 million from a revenue of RM57.12 million for the year ended June 30 2006.

The likelihood of the deal taking place comes at a time when more than a fifth of the loan stock holders have converted their papers into new Aliran shares over a three-month period.