KUALA LUMPUR (Jan 19): Electrical and mechanical engineering services provider Kejuruteraan Asastera Bhd (KAB) is set to acquire a mini-hydropower plant located in North Sumatera, Indonesia.
In a statement on Wednesday (Jan 19), KAB said that its wholly-owned subsidiary KAB Energy Holdings Sdn Bhd (KABEH) had entered into a term sheet agreement with Sarawak Cable Bhd (SCB) to acquire the entire issued share capital of the latter’s Indonesia-based subsidiary, PT Inpola Mitra Elektrindo (PT IME), for a purchase consideration of RM10,000.
“KABEH’s acquisition shall be free from all encumbrances. PT IME will also be released from all liabilities and encumbrances upon the full settlement of the purchase consideration and outstanding dept of up to RM61.5 million.
“As part of the agreement, KABEH is required to undertake a due diligence exercise, which is expected to be completed within three months from the date of the execution of the term sheet,” the group added.
KAB noted that PT IME is a company that designed, constructed, developed and operates a mini-hydropower plant, named Kombih III, with an installed capacity of 11 megawatts.
“It achieved commercial operations on Oct 12, 2021,” KAB added.
According to the group, PT IME has an existing power purchase agreement to supply energy to Indonesian state-owned utility company PT Perusahaan Listrik Negara for a concession period of 20 years.
KAB managing director Datuk Lai Keng Onn noted that this is the group’s maiden venture into the hydropower sector as well as its first foray into Indonesia.
“We are excited to embark on this business journey and see this proposed acquisition of PT IME as being in line with the group’s business direction to expand the income stream and have a strong foothold in our green energy solution business, particularly in the renewable energy (RE) sector,” he added.
Lai said that annually, Kombih III generates approximately 49.056 million kWh, which offsets 26,784 tonnes of CO2 emissions.
He added that the group is confident that the proposed acquisition will yield very profitable returns, which in turn will provide stable and sustainable long-term recurring income for KAB for the next 20 years.
“Upon completion of the acquisition, the asset is projected to contribute at least RM270 million in revenue to the group over the concession period,” he said.
KAB noted that according to Indonesia's National Electricity Master Plan, the ratio of RE for energy resources is anticipated to continue accelerating to 23% by 2025, while the realised amount hit around 14% at the end of 2020.
“Hydropower generation capacity is expected to grow to about 40%,” the group added.
Meanwhile, in a separate filing, SCB said PT IME was identified as a target for sale after it entered into an asset sharing agreement with Hong Leong Islamic Bank Bhd, AmBank (M) Bhd and Bank Muamalat Malaysia Bhd and a trustee to settle debts of around RM124.59 million.
The company said the sale is expected to raise up to RM61.5 million, of which RM59.1 million will be used to clear some of its outstanding debts.
At 2.12pm on Wednesday, KAB had gained one sen or 2.86% to 36 sen, valuing the group at RM640.08 million.
Meanwhile, SCB slipped half a sen or 2.7% to 18 sen, giving it a market capitalisation of RM69.93 million.