Reservoir Link enters the renewable energy space

Reservoir Link said the SPV is intended to be principally involved in the provision and implementation of solar PV projects similar to those currently being undertaken by Solar Bina.(File pic shows solar energy panels)

PETALING JAYA: Oil and gas (O&G) service provider Reservoir Link Energy Bhd has proposed to buy a 51% stake in a special purpose vehicle (SPV) that will be involved in the solar segment for RM21.17mil, marking its foray into the renewable energy sector.

The company said that the “identified business and assets” of Solar Bina Engineering Sdn Bhd, valued at RM41.5mil, would be injected into the SPV.

In a filing with Bursa Malaysia yesterday, Reservoir Link said it had entered into a conditional term sheet with Lee Seng Chi outlining their mutual intention of entering a share sale agreement (SSA) for the company’s proposed acquisition of a 51% stake in the SPV.

Lee is the sole shareholder and managing director of Solar Bina, which is involved in the provision of implementation of solar photovoltaic (PV) projects for residential, commercial and industrial properties as well as large-scale solar PV plants.

Reservoir Link said the SPV is intended to be principally involved in the provision and implementation of solar PV projects similar to those currently being undertaken by Solar Bina.

Upon completion of the acquisition, Reservoir Link said it would be able to consolidate the financial results of the SPV, which is expected to contribute positively to the long-term earnings of the group.

“Underpinning this is a profit guarantee by Lee that the SPV will achieve an aggregate profit after tax of RM13.8mil for 24 months from the completion date of the acquisition, ” it said in a statement.

Reservoir Link said its acquisition cost works out to be RM21.2mil based on the valuation of the “identified business and assets” to be injected into the SPV by Solar Bina.

About RM8.5mil or 40% of the cost will be settled in cash while the remaining RM12.7mi will be via the issuance of 18.2 million new Reservoir Link shares at an issue price of 70 sen per share.

“Our pivot into the renewable energy industry has been in our strategic pipeline and we are optimistic that this venture will be a new stream of long-term recurring income for Reservoir Link.

“We are confident of Solar Bina’s capabilities and will leverage on each other’s expertise to bid for more solar renewable projects going forward, ” said Reservoir Link executive director Thien Chiet Chai.

To date, Solar Bina has a total of 300MW of ongoing solar PV projects.

In a separate announcement, Reservoir Link said its unit has been awarded a three-year contract by Petronas Carigali Sdn Bhd for the provision of well leak repair equipment’s and services. The job won by its wholly owned subsidiary Reservoir Link Sdn Bhd would commence from March 22,2021, to March 22,2024.

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