ECM Libra Investment Research has maintained its 'neutral' call on the water industry as it doubts a resolution to the restructuring deadlock could be achieved by Jan 30, 2011 despite the Selangor state government's offer.

We are not overly optimistic on the latest attempt at consolidating Selangor's water industry taking into account the lower valuations for Konsortium Abass Sdn Bhd and Syarikat Pengeluar Air Sungai Selangor Sdn Bhd (SPLASH) as success of the offer would require acceptance by all four players, it said in its research note today.

It said in SPLASH's case, the difference of some RM500 million as compared to the previous offer was significant, whereas the current valuation for Abass' equity was lower than the previous two offers, the first of which was rejected.

ECM Libra said it was also unclear if the water players would secure the operations and maintenance role subsequent to the restructuring exercise.

This could prove to be a deal-breaker for Gamuda's SPLASH, it said.

In a filing to Bursa Malaysia yesterday, Kumpulan Perangsang Selangor Bhd and Gamuda Bhd announced that their subsidiary and associate companies, Abass and SPLASH, had received an offer from the Selangor government to acquire 100 per cent of the equity in the said companies for RM9.39 per share and RM5.95 a share respectively. -- Bernama