YTL Power International Bhd agreed yesterday to acquire a 35% stake and loan stocks in the second largest independent power producer (IPP) in Indonesia in a deal valued at US$139.4mil (RM529.7mil).
YTL will also acquire 100% equity in the operator of the power station for US$3.6mil.
“Indonesia is the most natural growth market in the region for us to deploy our energy and infrastructure skills,'' YTL Power managing director Tan Sri Francis Yeoh said in a statement.
The IPP is PT Jawa Power and the operator of the power station, PT Powergen Jawa Timur.
Established in 1995, Jawa Power owns a 1,220-MW coal-fired generation plant, which has two electricity generation units, with an installed capacity of 610 MW each, and has been commercially operational since November 2000. The electricity is sold to PT Perusahaan Listrik Negara (PLN), the state-owned power utility company, under a 30-year power purchase agreement (PPA) signed in 1995.
Under the terms of the PPA, PLN is the off-taker for the entire generation capacity and electricity produced by Jawa Power.
The power sales tariff was set at US$65.90/MWh, although PLN said in 2002 that this had been renegotiated to a tariff of US$46.80/MWh plus a payment of US$900,000 a month for 30 years.
Under fuel supply agreements signed in 1996, coal is supplied from Kalimantan by PT Berau and PT Kideco Jaya Agung.
Jawa Power is currently 50% owned by Jawa Power Holding BmbH, a wholly owned subsidiary of Siemens AG, and 15% by PT Bumipertiwi.
The balance 35% – the block that YTL Power will buy – is owned by Ergon Energy Ltd, a wholly owned unit of Powergen plc.
Financing of the acquisition will be via YTL Power's internal funds. YTL Power had RM4.42bil in cash and deposits at end-March.
“Following the completion of the acquisition of a 33.5% stake in Electranet SA in December 2000 and a 100% stake in Wessex Water Ltd, a water and sewerage operator in the UK in May 2002, YTL Power regards the proposed acquisition as a natural extension of its development and expansion as an international multi-utility provider,'' the company said in a statement to Bursa Malaysia.
“The acquisition will enable YTL Power to develop and expand its presence in utility businesses worldwide, particularly in the rapidly developing Asean market. The investment in Jawa Power is a rare opportunity to invest in a well structured and operating asset that is past the construction stage and is already generating profits,'' it added.
YTL Power said its investment – barring unforeseen circumstances – was expected to contribute, before financing costs, an after-tax profit of about RM105mil to the group starting from financial year to June 2005.
Jawa Power posted a net profit of US$105.1mil on revenue of US$421mil for the year ended December 2002.
The company had total borrowings of US$1.28bil as of the same date.
“It looks like a good deal for YTL Power,'' said the head of research at a local stockbroking company.
“It is buying a stake in an Indonesian power plant at a good price, much lower than what it would cost to do in Malaysia.''
The 35% block that YTL Power will buy was originally destined for a consortium comprising Singapore's Keppel Energy Ltd and Electric Power Development Co Ltd of Japan. The consortium was to have paid US$142.6mil for the equity and loan stock.
The accord to sell to the consortium was announced on Jan 30 but pursuant to the shareholders' agreement, it was subject to pre-emption rights of the other two shareholders, Siemens and Bumipertiwi.
Bumipertiwi exercised its right to pre-empt the sale of Powergen's interest to the consortium on April 30 and will on-sell the entire interest to YTL Power.
As part of the acquisition, YTL Power will be required to enter into agreements under which it may be obliged proportionately with Siemens to invest a further US$11.66mil in Jawa Power and buy up to US$60mil of bonds issued by Jawa Power from certain lenders. YTL Power hopes to complete the acquisition by the third quarter this year.
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