KUALA LUMPUR (Dec 9): Jentayu Sustainables Bhd (KL:JSB) has cautioned that the legal challenge filed against its Dec 4 extraordinary general meeting (EGM), if prolonged, may result in delays to the implementation and financing timeline of its Project Oriole hydropower development in Sabah.
A shareholder, Andy Lai Wee Young, has filed a lawsuit seeking declarations to invalidate the EGM and the resolutions passed, on grounds relating to the company’s decision to postpone the initial meeting and the process surrounding its reconvening.
In a filing on Tuesday (Dec 9) responding to Bursa Malaysia’s queries, Jentayu said any postponement in implementing the proposed private placement, which was approved at the EGM to fund Project Oriole, may affect the timely execution of the project and its broader funding strategy, with opportunity costs arising from the delay.
At the EGM on Dec 4, shareholders approved a private placement of up to 20% of the company’s issued capital to raise up to RM45.26 million to fund Project Oriole.
Without the proceeds from the placement, Jentayu said that its cash flow position may become increasingly strained and that the company may not be able to meet the required 20% equity commitment for Project Oriole.
This, it added, will potentially delay the completion of financing structures with senior lenders and create uncertainties in meeting power purchase agreement (PPA) requirements, exposing it to potential cost escalations and contractual implications.
Project Oriole — a RM2.8 billion, 162MW run-of-river hydropower project at Hulu Sungai Padas in Sipitang — is regarded as one of Sabah’s largest renewable energy developments and is backed by a 40-year PPA signed with Sabah Electricity Sdn Bhd (SESB) in April.
Jentayu owns 70% in the project, alongside SESB, a 80%-owned unit of Tenaga Nasional Bhd (KL:TENAGA) with 20% stake, followed by Yayasan Sabah (10%).
The PPA allows for the sale of up to 868,894 megawatt-hours annually, with operations scheduled to begin by June 1, 2029.
In Tuesday's filing, Jentayu also confirmed that the High Court did not grant the injunction sought by Lai, who had applied to restrain the company from convening the Dec 4 EGM or giving effect to its resolutions.
Instead, the court recorded a consent order under which the company has undertaken not to issue or allot shares to any proposed new investor pursuant to the approved private placement, pending disposal of the suit, though the undertaking does not prevent Jentayu from taking preparatory steps including identifying investors, preparing documentation and obtaining approvals.
The company said the potential liabilities arising from the suit include legal costs, professional fees, and costs relating to holding a fresh EGM should approvals need to be sought again.
"The company has engaged legal counsel to defend the originating summons and will continue to take all actions necessary to protect its interests, including reserving the right of the company to take any action available to the company against the plaintiff for costs and losses incurred by the company," Jentayu said.
Jentayu shares slipped 0.5 sen or 1.72% to close at 28.5 sen on Tuesday, valuing the company at RM129.3 million.