THE EDGE summaries 18 Feb - 24 Feb (Part 3, final)

Sime Darby eyeing two ports

• The EDGE reported that Sime is in the midst of negotiating the takeover of Penang Port and Sandakan port
• Details of pricing and the mechanics of how the deals will be structured are still unclear
• Penang Port is currently under Penang Port Sdn Bhd who has a concession up to 2024; Konsortium Logistik Bhd had previously looked at the possibility of taking over Penang Port
• Sources say that Sime's interest in the port may be in line with it being given a mandate to develop RM177bil NCER (an 18-yrs development project)
• The second port that interests Sime is Sandakan Port
• Sandakan Port will give Sime more control over distribution of commodity to North Asia
• Sandakan Port is now under Sabah government's Sawit Kinabalu Sdn Bhd, Sime is said to negotiate for management and operational control with the State maintaining ownership of assets

Nod to merge water assets

• KDEB (parent company of KPS) has received a mandate to consolidate water assets in Selangor
• KDEB has also been awarded the contract to build, operate and maintain the Langat 2 water scheme
• This means that the takeover of Puncak Niaga by (entities linked to) Selangor State government is getting closer to reality
• The consolidation offers the current owners of water assets (Puncak Niaga owns 29 water treatment plants) an opportunity to relinquish their stakes at a fair value
• KPS, being KDEB's listing vehicle for its water assets, will lead the consolidation process and it is also responsible to appoint independent advisers to derive the assets fair value
• Pengurusan Aset Air Bhd (Wamco), a wholly owned entity by the Ministry of Finance, will be the owner of the assets post-consolidation (will take more than 6 months to acquire and migrate the assets to a single owner)
• Post-consolidation, a special purpose vehicle (SPV) controlled by KPS will operate and maintain assets of Wamco
• The SPV will have the right to charge the end-users tariffs and in return, the SPV has to pay Wamco a leasing fee

Should Genting buy the remaining shares of Landmarks?

• Landmarks' 74% subsidiary Bintan Treasure Bay Pte Ltd has secured the approval for Bintan's 338ha land to be used for activities as gaming
• Following the zoning for the development of an integrated resorts and properties. the project GDV grew from RM4.1bil to RM9.6 (the revised gross development cost is RM4.5bil)
• At the end of December last year, after several rounds of Landmarks share acquisition, Genting stakes in Landmarks was 30.31%
• This means Genting needs an additional 12.9mil shares (2.69%) to trigger a a mandatory general offer
• Based on current price, Genting will need at least RM1bil to buy the remaining 70% stake in Landmarks, which is a relatively small sum for Genting
• With Bintan's growing GDV value, it makes sense for Genting to increase its stakes
• However, analysts argued that Genting has already taken a large financial burden in developing Singapore's Sentosa Island and it may not want to irk Singapore Government considering the proximity of the two casinos
• Besides the political (and cultural) risk of opening a casino in the Islamic-state is high; can anybody guarantees a smooth running of a casino in Indonesia if the political landscape changes?