Friday, September 17, 2010

Malaysian Trustees seeks meeting of Selangor water industry players, bondholders

KUALA LUMPUR: Malaysian Trustees Bhd is convening a meeting for the Selangor water industry players and bondholders on Sept 24 in a move to resolve the'' impasse in the sector and concerns of operating environment uncertainties.

Such a resolution has become more urgent after the Selangor water players recently saw their debt issuances downgraded by both Malaysian Rating Corp Bhd (MARC) and RAM Rating Services Bhd who also warned further multiple-notch downgrades.

PUNCAK NIAGA HOLDINGS BHD [] (PNHB) said on Friday, Sept 17, it was informed by Malaysian Trustees the meeting was for all the Selangor water concessionaire holders, operators and bond issuers.

Also included in the meeting would be the term loan borrowers -- Syarikat Bekalan Air Selangor Sdn Bhd (Syabas), Puncak Niaga Holdings Bhd (PNHB), Konsortium ABASS Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH)

The meeting is scheduled to be held at Menara Prudential, Jalan Sultan Ismail, on Sept 24 at 3pm.

Malaysian Trustees, which is the trustee for the holders of PNHB's RM546.87 million debt notes and 109.37 million warrants, issued a notice of collective bondholders' informal meeting on Wednesday, Sept 15.

The agenda sought by Malaysian Trustees include 'the impact of the current situation in the water sector on water treatment operators' cash flow; and the course of action or actions to be taken by the bondholders/lenders to resolve the situations'.

On Sept 8, the Selangor water players yesterday saw their debt issuances downgraded by both Malaysian Rating Corp Bhd (MARC) and RAM Ratings on the back of operating environment uncertainties.

Syabas, Puncak Niaga (M) Sdn Bhd (PNSB), PNHB, RUN Holding SPV Bhd (RUNH), SPLASH, Viable Chip (M) Sdn Bhd (VCSB) and Titisan Modal (M) Sdn Bhd (TMSB) were downgraded by MARC, while RAM downgraded SPLASH and Taliworks Corp Bhd's subsidiaries Destinasi Teguh Sdn Bhd and Sungai Harmoni Sdn Bhd.

Both rating agencies had cautioned that in the absence of meaningful progress in the industry's restructuring and negotiations, further multiple-notch downgrades were likely by end-2010.

MARC said urgent intervention on the part of the federal and the Selangor state governments was required to prevent a freefall of the current ratings in the following months.

The Edge Financial Daily had reported on Sept 6 that bondholders of Selangor water companies had met in a closed-door session with Pengurusan Aset Air Bhd (PAAB) to discuss issues relating to the consolidation of the state's water industry.

The bondholders were feeling jittery as some of the bonds issued by the water concessionaires in Selangor were undergoing technical defaults, as witnessed by yesterday's downgrading by both MARC and RAM.

The main issue faced by them is that Syabas' 37% tariff hike was not implemented as agreed upon. This has affected the cash flow of the water companies in the state.

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