Malakoff gets shareholders’ nod for Alam Flora deal

The 96.8% approval clears way for the IPP to pick up a controlling 97.4% stake in Alam Flora


Malakoff Corp Bhd’s shareholders yesterday voted to approve its proposed RM944.61 million deal to acquire Alam Flora Sdn Bhd from sister company, DRB-Hicom Bhd.

The 96.8% approval clears the way for the independent power producer (IPP) to pick up a controlling 97.37% stake in Alam Flora, thus now diversifying into the integrated solid waste collection and management and public cleansing management services business.

The acquisition was made through its wholly owned subsidiary, Tunas Pancar Sdn Bhd, pursuant to a conditional share sale agreement (SSA) with Hicom Holdings Bhd in order to diversify into solid waste management and fuel earnings growth.

“The acquisition of Alam Flora will hasten Malakoff’s expansion into the increasingly important and fast growing environmental related business and its push into the renewable energy (RE) sector,” Malakoff chairman Datuk Hasni Harun (picture) noted in a statement.

He added the deal has its merit as the generation sector is becoming increasingly competitive and challenging.

The SSA is conditional upon, interalia, approvals/consents being obtained from non-interested shareholders of Malakoff and DRB-Hicom at their respective EGMs, as well as appro-vals from relevant authorities and financial institutions.

Subject to meeting the conditions precedent, it is expected to complete within six months from the execution of the SSA.

The acquisition, according to Hasni, offers synergistic opportunities between Malakoff and Alam Flora to develop waste-to-energy (WTE) projects, leveraging on their respective core competencies and experience.

“This will be in line with the government’s aspiration to increase the share of RE in Malaysia’s energy generation mix from 2% currently to 20% by 2025,” he said.

Apart from its core power generation business, Malakoff also provides water desalination and operation and maintenance services for power and water plants.

Malakoff is now the largest IPP with a net generating capacity of 6,346MW from its seven power plants in the country.

Malakoff’s exposure to the RE generation sector is via its stake in a joint venture that owns the 420MW Macarthur Wind Farm in Victoria, Australia.

In a filing to the local bourse yesterday, Malakoff noted that by taking into account the prospects of economic development and population growth, Malaysia will need to look beyond waste disposal and landfills towards a more sustainable waste management, especially through WTE projects.

The group expects Alam Flora to contribute 25% or more to its net profit in the future.

Alam Flora currently holds a concession to provide solid waste collection and public cleansing management services to several concession areas in Pahang and the Federal Territories of Kuala Lumpur and Putrajaya.

The concession agreement is for a period of 22 years from Sept 1, 2011, to Aug 31, 2033, and covers a total area of 36,430 sq km with an aggregate waste generation of at least 3,736 tonnes per day.

Through Alam Flora’s wholly owned subsidiary, DRB-Hicom Environmental Services Sdn Bhd (DHES), Malakoff will be able to hasten its entry into the non-concession environmental services sector such as in the provision of integrated solid waste management services, recycling and integrated facility management services.

At present, DHES operates eight landfills, one transfer station, one leachate treatment plant and two incinerator plants.