KUALA LUMPUR (March 21): Jentayu Sustainables Bhd (KL:JSB) said it has incurred a total cost of RM6.35 million due to the termination of its proposed acquisition of hydro assets in Sabah.

In a filing with Bursa Malaysia on Friday, the company said the expenses covered professional fees and advisory costs, classifying these as "prepayment" in its financial statements for the financial year ended June 30, 2024 (FY2024).

With termination of the acquisitions, the cost will now be expensed off in the financial year ending June 30, 2025 (FY2025), impacting the group’s profit and loss statement, the group said.

Jentayu Sustainables also disclosed that an additional RM905,600 in potential costs remain outstanding, which will be recorded as expenses in subsequent periods. The group’s pro forma net tangible assets as of Dec 31, 202, will be reduced from RM134 million to RM127 million following the termination.

Despite the financial impact, Jentayu Sustainables sees no effect to its ongoing operations, as the business has continued as usual throughout the acquisition process.

Jentayu Sustainables announced the termination of the proposed acquisitions on Monday, after the Securities Commission Malaysia (SC) rejected the group’s request for an extension to complete the deal. The deal was initially inked in September 2021, involving the purchase of Senja Optima Sdn Bhd, Telekosang Hydro One Sdn Bhd and Telekosang Hydro Two Sdn Bhd.

Telekosang Hydro One and Telekosang Hydro Two own and operate the 40MW Telekosang Hydro power plant project. Meanwhile, Senja Optima owns 70% in both companies. The remaining 30% stakes are owned by Inno Hydropower (T) Sdn Bhd.

Jentayu Sustainables had intended to acquire Senja Optima for RM44.6 million, alongside the entire redeemable preference shares in Telekosang One and Telekosang Two for RM93.6 million, as well as all junior bonds in Telekosang One for RM38.1 million.

The total deal, worth RM173.25 million, was to be settled mostly through the issuance of new shares.

The transaction was classified as a related-party deal, as the vendors — Kasa Tuah Sdn Bhd and Borneo Sustainable Sdn Bhd — are owned by Jentayu Sustainables’ executive chairman Datuk Beroz Nikmal Mirdin and his wife, Datin Nurhaida Abu Sahid, daughter of Maju Group executive chairman Tan Sri Abu Sahid Mohamed.

Jentayu Sustainables said the decision to terminate the deal was made considering the additional costs for a new submission to the SC, potential delays and the uncertainty surrounding the completion timeline.

In addition to the hydro asset deal, Jentayu Sustainables had also proposed to acquire Jentayu Solar Sdn Bhd, which operates a 5.99MW solar power plant in Kedah. Presently, the company has not reached an agreement on whether to terminate that acquisition before its current fulfilment deadline of March 31, 2025.

Shares in Jentayu Sustainables ended 0.5 sen or 1.25% higher at 40.5 sen on Friday, valuing the group at RM180.2 million.

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Jentayu Sustainables’ Sabah hydro asset acquisitions mutually terminated