TADMAX Resources Bhd has proposed to dispose of a 25% equity interest in Pulau Indah Power Plant Sdn Bhd (PIPP) to Korea Electronic Power Corporation (KEPCO) for RM41.75 mil.
In a filing with Bursa Malaysia today, Tadmax said it had entered into a conditional share sale agreement (SSA) with KEPCO for the proposed disposal of 12.5 million ordinary shares in PIPP.
The company said out of the RM41.75 mil proceeds from the disposal, RM30 mil would be utilised for future investment in other complementary business and/or assets, RM2.45 mil for working capital and RM9.3 mil for the proposed disposal exercise.
“The management of Tadmax aims to further strengthen its foothold in property development and construction activities through future acquisitions of landbank at strategic locations,” it added.
Tadmax, which originally owns 100% of PIPP, entered into a heads of agreement (HOA) with KEPCO and Worldwide Holdings Bhd (WHB) on Sept 14, 2018, wherein all parties agreed to collaborate on the power plant project.
Under the HOA, subject to negotiations and finalisation of a definitive agreement, KEPCO would hold a 25% stake in PIPP, WHB 35% and Tadmax 40%.
KEPCO’s 25% shareholding in PIPP is also a condition stipulated in the Ministry of Energy, Science, Technology, Environment and Climate Change’s (MESTECC) letter.
Tadmax is expected to recognise a net gain on disposal of approximately RM11.02 mil and a net inflow of RM32.45 mil in cash which will provide additional working capital for the group’s existing and future prospects, as well as its investments in other complementary businesses and/or assets.
On March 13, Tadmax sealed an SSA for the disposal of 17.5 million ordinary shares representing 35% of the issued share capital of PIPP to WHB.
On the same day, Tadmax also announced that PIPP had executed an engineering, procurement, construction and commissioning contract in relation to the power plant project with the consortium of Posco Engineering & Construction Co Ltd, Mitsubishi Corporation and PEC Powercon Sdn Bhd.
“Tadmax announced that the company had on March 16 received a letter from WHB wherein WHB expressed its interest to acquire an additional 40% equity interest in PIPP.
“Tadmax on March 26 notified that the company has no objection to WHB’s proposed interest and the parties agreed to move forward to liaise with all relevant governmental and/or regulatory bodies in procuring all the necessary approvals or consents,” it said.
The company said based on estimation, the total cost for the construction and commissioning of the power plant projects is about RM3.30 bil.
About 80% of the cost would be funded via a debt instrument in the form of sukuk and the remaining via internally generated funds and/or additional funds from shareholders of PIPP and/or subordinated instruments. — April 21, 2020, Bernama
