Tenaga Nasional is one of the local and foreign companies that have submitted indicative, non-binding offers for 1MDB's power assets.
KUALA LUMPUR: Tenaga Nasional Bhd
(TNB) has submitted an indicative non-binding proposal to buy 13 power assets of Edra Global Energy Bhd from 1Malaysia Development Bhd (1MDB).
In a filing with Bursa Malaysia on Wednesday, the power giant said it had sent in the proposal to buy the five domestic and eight international power assets of Edra.
Edra has about 13 power and desalination plants in five countries. TNB is already in the process of buying Edra’s 70% stake in a 2,000MW coal-fired plant in Jimah, Negri Sembilan, (dubbed Project 3B) for RM46.98mil.
TNB said Edra’s power assets would be a strong fit for its growth strategy.
“A combination would help ensure the long-term continuity of steady and competitively priced power to domestic customers and consumers. The combination would also enable TNB to pursue its strategy of establishing an international footprint in areas where growth in power demand is increasing,” it said.
TNB said it was in the initial stages of its assessment of Edra’s power assets. Therefore, there can be no assurance that any transaction will be concluded.
“Any potential transaction would need to make strong commercial and financial sense and be value accretive to Tenaga’s shareholders. Any transaction would also be assessed based on the highest standards of corporate governance,” it said.
TNB said any transaction would only be completed following completion of an in-depth due diligence on Edra’s power assets.
If TNB decide to pursue any transaction, other independent and third-party criteria and requirements would also need to be addressed. These include:
a) Appointing a principal adviser to ensure, among others, that the transaction is done on fair and reasonable terms and conditions;
b) Getting an opinion from an independent adviser stating that the transaction is fair and reasonable insofar as TNB’s shareholders are concerned, and not to the detriment of TNB’s minority shareholders;
c) Seeking approval from TNB’s non-interested shareholders for the transaction at a general meeting; and
d) Getting all relevant approvals, consents, waivers and clearances from governmental, regulatory authorities and third parties.
Last month, news that the Government had approved TNB’s plan to take over Project 3B sent its share price plummeting. Etiqa Insurance and Takaful head of research Chris Eng then told StarBiz: “The silver lining is that by (TNB) buying just 3B, it reduces the pressure (for TNB) to take over all of Edra’s assets.”
Edra is not short of suitors. Besides TNB, three other local companies are reportedly interested in buying Edra or its assets - YTL Power International Bhd, Malakoff Corp Bhd and CI Holdings Bhd.
In a statement issued after TNB’s Bursa Malaysia announcement, 1MDB welcomed TNB’s interest in Edra.
1MDB said it had also received indicative, non-binding offers from other local and international parties in relation to its power assets.
“Our board of directors will review the various proposals received in due course, following which select parties will be invited by 1MDB’s financial advisor to conduct further due diligence on Edra, culminating in the submission of binding offers for our board’s consideration.
“In assessing these offers, the board will be guided by, among other things, value maximisation to 1MDB’s shareholders, deal certainty, and terms that are fair and reasonable,” the government-linked company said.
1MDB had planned to list Edra to ease its debt burden, but the IPO, last scheduled for early this year, has been delayed.
TNB’s share price closed 16 sen higher at RM12.66 on Wednesday.
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