Malakoff to buy assets abroad


BY JAGDEV SINGH SIDHU

MALAKOFF Bhd is looking to buy power assets abroad as it would soon have a sizeable chunk of Malaysia's power generation capacity. 

However, the group's top priority now is to ensure that its acquisition of a 40% stake in Kapar Energy Ventures Sdn Bhd (KEV), which owns the Kapar power plant, is completed and that the plant operates efficiently. Tenaga Nasional Bhd owns the balance 60% of KEV. 

Speaking to the media after Malakoff's EGM in Kuala Lumpur yesterday, managing director Ahmad Jauhari Yahya said that the expansion overseas was a medium-term priority for the group at the moment although it recognised the need to do so. 

Ahmad Jauhari Yahya

“The main priority is to make sure the Kapar plant operates well under the terms of the PPA (power purchase agreement),'' he said. 

Malakoff obtained yesterday the nod from shareholders to proceed with its acquisition of the stake in the 2,420-MW Kapar power station. The company's stake in the Kapar plant, coupled with its 90% interest in the 2,100-MW Tanjung Bin power plant being built in Johor, would boost its share of the country's power generation sector to 21% in 2007. Malaysia is forecast to have an installed capacity of 22,170 MW by that year. 

The Kapar station is the country's only multi-fuel power plant. Its location in the Klang Valley would also ensure that it enjoys a high level of dispatch of electricity. 

Other power assets owned by Malakoff are 93.75% of the Lumut power plant, 20% of Port Dickson Power Bhd, 75% of the GB3 Power plant and Prai Power. 

“That is quite a sizeable portion of the generation assets in the country and, increasingly, we will be looking outside Malaysia for opportunities,'' Jauhari said. 

Furthermore, he said, prospects for fresh power projects in Malaysia appeared limited at present as the planting programme for new power plants was sufficient to meet the country's energy needs up to 2012. 

Jauhari acknowledged that it was more difficult to secure existing or new power plants nowadays and said any opportunity to do so would be weighed against the viability of the project. 

To finance the acquisition of the Kapar plant stake, Malakoff will issue about RM3.4bil in Islamic bonds with tenures ranging from one to 15 years. 

The consortium that will take up the bonds consists of AmMerchant, RHB, Bank Muamalat, KAF and Malaysian International Merchant Bankers. 

The acquisition of the 40% stake in KEV is expected to have an immediate earnings enhancement effect on Malakoff's bottom line. Jauhari did not disclose the quantum of the increase but said KEV's RM383mil redeemable unsecured loan stocks that Malakoff would own were generating an interest rate of 15% or RM57mil year. 

Malakoff shares, which have been gaining ground strongly the past few weeks, closed up 10 sen or 1.7% at RM6. 

 MALAKOF :  [Stock Watch]  [News]

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