Sime Darby Bhd's wholly-owned subsidiary Sime Energy Holdings Pte Ltd has bought 50% equity interest in Island Power Holdings Pte Ltd (IPH) from IG Island Power B.V. as part of the conglomerate's efforts to expand its power business portfolio in the region.
A Sime Darby statement said yesterday the acquisition was completed on Thursday and that the 50% equity was transferred by Sime Energy to another subsidiary Sime Power Pte Ltd.
IPH, whose current paid-up capital is S$100, is currently developing a 715-MW combined cycle gas turbine power plant on Jurong Island in Singapore.
The overall project cost is estimated at S$898mil or approximately RM1.95bil. It is scheduled to start operations by September 2006 and cater to the power needs of the city-state.
Sime Darby said the acquisition offered the group an opportunity to enhance its expertise in power plant operations and establish itself as an important player in three key South-East Asian markets, namely Malaysia, Singapore and Thailand.
The consideration for the 50% stake in IPH is S$50, or approximately RM109, based on the par value of the shares acquired.
Under the terms of the share sale agreement, Sime Power would provide IPH with a loan of US$4.56mil (RM17.3mil), being 50% of the development and construction costs incurred on the project up to Aug 31 this year.
A substantial portion of the additional development and construction costs of the project will be funded by IPH through project debt financing.
The residual funding required would be met by additional shareholders' loan in equal proportion from Sime Power and IG Island Power.
IG Island Power, which still holds the balance 50% interest in IPH, is a wholly-owned unit of InterGen n.V., which in turn is a joint venture between Shell Generating (Holdings) B.V. and Bechtel Enterprises Energy B.V. The latter is a global power generation firm operating or building 20 power stations representing over 16,000 MW.
Currently, Sime Darby has two power plants: the 440-MW Port Dickson power plant and the 103-MW Laem Chabang Power Co Ltd in Thailand.
The Sime Darby board said it was of the opinion that IPH was a good investment given the project's expected high operational efficiency and low cost structure, which would result in a high merit order position vis-a-vis the existing large generators in a stable electricity pool market.
On the policies on foreign investment and repatriation of profits, Sime Darby said profits from investment in Singapore companies could be repatriated without any restrictions.
The acquisition, it said, represented a long-term investment for Sime Darby and the profits would be repatriated over the life of the asset.