by S BIRRUNTHA / pic by HUSSEIN SHAHARUDDIN
TENAGA Nasional Bhd (TNB) is buying an additional 19% interest in Southern Power Generation Sdn Bhd (SPG) from SIPP Energy Sdn Bhd for RM238 million.
SPG was incorporated on Aug 12, 2016, as a special-purpose vehicle for the development of a combined cycle gas turbine power plant in Pasir Gudang, Johor.
In a Bursa filing yesterday, the power utility stated that major construction works on the project have been completed with an overall project progress of 99.3% as of end-August 2020.
TNB now owns 51% of ordinary shares in SPG, while SIPP Energy holds the remaining 49%.
Other than ordinary shares, TNB and SIPP Energy also subscribed for redeemable preference shares issued by SPG. Upon completion of the stake acquisition, TNB will hold 70% of the ordinary shares in SPG and it will remain a subsidiary of TNB.
TNB stated that it will utilise its internal funds to pay for the purchase. As part of the deal, TNB will also acquire 36.79 million redeemable preference shares in SPG from SIPP Energy.
The purchase consideration was derived based on issued ordinary shares capital in SPG with valuation based on a discounted cashflow method for the 13% redeemable preference shares.
This was after taking into consideration that the progress of the project was nearing completion and most of the construction risks at the point of acquisition had been mitigated.
“Based on the latest consolidated statements of TNB for the financial year ended Dec 31, 2019, the acquisition is not expected to have a material effect on the net assets and gearing of TNB,” the group said.