TNB buys 1MDB's project 3B for RM47m

PETALING JAYA: Tenaga Nasional Bhd (TNB) has entered into a share sale and purchase agreement with 1Malaysia Development Bhd (1MDB) for the acquisition of a 70% shareholding in Jimah East Power Sdn Bhd (JEP) for RM46.98 million.
JEP is the special purpose vehicle company set up to develop the 2,000MW coal-fired power plant in Jimah, Negeri Sembilan, known as Project 3B. Japan's Mitsui Corp Ltd owns the remaining 30% equity interest in JEP.
TNB said the actual project development cost incurred by 1MDB was RM83.68 million as at April 17.
"Estimated project costs are about RM11.7bil which will be financed through a combination of project finance and equity.
"Any debt raised will not have an adverse impact on TNB's credit profile and consolidated gearing will remain within appropriate levels. The effects on TNB's future earnings and EPS will only be determined upon completion of the project," it said.
TNB said the project was expected to achieve its scheduled commercial operation date for Unit No. 1 and Unit No. 2 no later than June 15, 2019 and Dec 15, 2019 respectively.
TNB said it and its appointed advisors had carried out a comprehensive due diligence and risk assessment on the acquisition of the project.
"The identified risks associated to the project have been assessed and mitigated," it said.
For illustrative purposes, based on TNB's consolidated balance sheet ended Feb 28, 2015, and debt amount of RM9 billion, TNB's consolidated gearing would increase from 35% to 42%, it added.
TNB added the increased gearing was within its appropriate level of gearing.
"TNB does not assume any guarantee of 1MDB. TNB's financial obligations will only be in respect of equity funding of JEP.
"Any project liabilities incurred to date by JEP will be assumed by TNB and Mitsui proportionately and will be met by shareholders' advances, which will be reimbursed to TNB and Mitsui when JEP reaches financial close," it said.