The proposed disposal will increase Malakoff’s reserves for investments in future power and water projects

by SHAZNI ONG/ pic by BLOOMBERG

MALAKOFF Corp Bhd intends to sell its 50% participating interest in the unincorporated joint venture (UJV) of the Macarthur Wind Farm (WF) in Australia held via Malakoff Wind Macarthur Pte Ltd (MWM) for A$356.85 million, or RM1.02 billion, to two parties.

Malakoff and its wholly owned subsidiary, Skyfirst Power Sdn Bhd (SPSB), have entered into a conditional share and unit purchase agreement with buyers, Megawatt Financing Pte Ltd and AMPCI Macarthur Wind (T) Pte Ltd, for the proposed disposal by SPSB of its stake in Malakoff Australia Pte Ltd (MAPL) and Wind Macarthur Holdings (T) Pte Ltd.

The proposed disposal also comprised the entire interest in Wind Macarthur Holdings Trust (WMH Trust) which collectively represents 50% participating interest in the UJV of the Macarthur WF.

The purchase price was arrived at on a willing-buyer willing-seller basis, based on the discounted cashflow method of the remaining life of the offtake contract with AGL Hydro Partnership (AGLH) of 18 years, Malakoff exchange filing yesterday noted.

“Based on the purchase price, the proposed disposal will give rise to an estimated net gain on disposal of RM546 million,” the independent power producer stated.

The proposed disposal is expected to be completed by the first quarter of 2020 (1Q20), Malakoff added.

On June 28, 2013, Malakoff, via SPSB, acquired a 50% participating interest in Macarthur WF from Three River Holdings No 2 Ltd and Meridian Energy Australia Pte Ltd — wholly owned subsidiaries of Meridian Energy Ltd.

The Macarthur WF is a 420MW operational wind farm located 16km east of the town of Macarthur, in southwestern Victoria, Australia.

Macarthur WF consists of 140 x 3.0MW V112 Vestas wind turbine generators and has achieved practical completion in January 2013.

The wind farm is also the largest in the Southern Hemisphere.

Macarthur WF operates as a UJV, which is held equally by MWM, an indirect wholly owned subsidiary of MAPL; and Macarthur Wind Farm Pte Ltd (MWF), a subsidiary of HRL Morrison Ltd.

Under the UJV structure, MWM and MWF hold rights to 50% of Macarthur WF’s output, and responsibility for 50% of all the UJV’s costs.

Based on MAPL group audited financial statements for the financial year ended Dec 31, 2018, the profit after tax (PAT) and net assets are A$22.8 million and A$26.2 million respectively.

Malakoff intends to use the proceeds from the proposed disposal to repay the acquisition loan of Macarthur (A$140 million), transaction costs (A$6.4 million) and the balance to be deposited into disposal proceeds account in accordance with the provision under the Trust Deed of the Sukuk (A$210.5 million), subject to the approval of the proposed disposal by the sukuk holders of the RM5.4 billion sukuk Murabahah issued by Malakoff Power Bhd.

Malakoff added that Macarthur WF has a low-risk profile with a fixed offtake contract with AGLH for the entire electricity and environmental products. The revenue payment is guaranteed by AGLH and is not impacted by plant availability, generation volumes or market risks.

The proposed disposal will increase Malakoff’s reserves for investments in future power and water projects, the company said.

For the financial year ended Dec 31, 2018, MAPL contributed revenue of RM163.4 million (representing 2% to the total revenue of Malakoff) and PAT of RM56.6 million (21% to the PAT attributable to the owners of the company).

Malakoff CEO Datuk Ahmad Fuaad Mohd Kenali said the deal provides an opportunity for Malakoff to unlock the value of its investment in Macarthur WF.

“The group will continue to be on the lookout for potential power and water assets within and outside the country,” he said in a statement.