PETALING JAYA: Tadmax Resources Bhd entered into a conditional share sale agreement with Korea Electric Power Corp (Kepco) on April 20 for the proposed disposal of a 25% stake in Pulau Indah Power Plant Sdn Bhd (PIPP) to Kepco for RM41.75 million cash.
PIPP is the special purpose vehicle involved in the development of a new 1,200-megawatt combined cycle gas turbine power plant to be constructed in Pulau Indah, Selangor.
The power plant project will be operated as an independent power producer under a “build-own-operate” concession contract in the form of a 21-year power purchase agreement to be entered into with Tenaga Nasional Bhd.
Kepco is Tadmax’s equity and technical partner for the power plant project.
The total costs for the construction and commissioning of the power plant project is estimated at about RM3.3 billion and is expected to be 80% funded via sukuk, with the remaining 20% to be funded via a combination of internally-generated funds and/or additional funds from the shareholders of PIPP and/or subordinated instrument.
“The gross proceeds of RM41.75 million arising from the proposed disposal are intended to be utilised for the future investment in other complementary businesses and/or assets (RM30 million), working capital purposes (RM2.45 million) and estimated expenses for the proposed disposal to Kepco (RM9.3 million),” Tadmax said in a stock exchange filing today.
On its complementary businesses, Tadmax aims to further strengthen its foothold in the property development and construction activities through future acquisitions of landbanks at strategic locations.
The proposed disposal to Kepco is to facilitate the shareholding split as outlined in the heads of agreement entered into by Tadmax, Worldwide Holdings Bhd and Kepco on Sept 14, 2018, and a condition to be complied in the Ministry of Energy, Science, Technology, Environment and Climate Change’s letter.
“The proposed disposal to Kepco allows the company to realise its investment in PIPP at the disposal consideration. The company is expected to recognise a net gain on disposal of RM11.02 million and a net inflow of RM32.45 million in cash which will provide additional working capital for the group’s existing and future projects as well as for the group’s future investments in other complementary businesses and/or assets,” Tadmax said.
The exercise is subject to the approval of Tadmax shareholders at an EGM to be convened.
Barring any unforeseen circumstances, the proposed disposal is expected to be completed by the third quarter of 2020.
