CAB Cakaran biomass power generation project on track

KUALA LUMPUR: Poultry producer CAB Cakaran Corp Bhd remains on track to start its power generation business in 2018, despite having to go it alone after a plan to partner a Japanese company with the technical know-how fell through.
Group managing director Christopher Chuah Hoon Phong is unfazed, however, saying that it has already received offers from other firms with the technical abilities to help the company in its endeavour.
"We can look into technology from China and Europe, instead of using Japanese technology. We have received offers from companies from China and Europe as well as other Japanese companies," Chuah told SunBiz.
CAB is now in the midst of completing the purchase of land in Gurun, Kedah, and hopes to kick start the application process to the Sustainable Energy Development Authority (Seda) next year.
Chuah said it will take between four and six months to obtain these approvals and sort out bank borrowings, after which it will begin preparing the documents and report for submission to Seda.
Of the 100 acres of land that it will obtain, 30 acres has been set aside for the biomass facility and 60 acres for the solar farm while a buffer zone will take up the remaining 10 acres.
"The solar farm can be completed within six months as it is very simple to set up but the biomass facility will take more time. We will need 18 months to set up the plant, put in a solar tank to contain the chicken droppings and other parts of the facility," Chuah said.
He said the solar farm should be up and running by early 2018 while the biomass facility should begin operations in 2018 or 2019.
CAB Amesist Biomass Generation Sdn Bhd was formed in November to carry out the business of green technology and to develop and operate power generation from biomass, solar, hydro and other renewable energy projects.
To recap, in March 2015, CAB signed a memorandum of understanding with Japan's New Chemical Trading Co Ltd and Seri Kedah Corp Sdn Bhd to establish a biomass power generation business, which will produce fertiliser as a by-product through the incineration of chicken droppings.
On its recent acquisition of Farm's Best Bhd's poultry processing unit, Farm's Best Food Industries Sdn Bhd (FBF), instead of just the assets, Chuah explained that it was to ensure that they would not lose the various certificates and licences.
"The first letter of intent (LoI) was only to buy the assets, not the company. If we continued with it, we would be facing the problem of all the necessary certificates being terminated if we used a new company," he said.
Chuah said it would have to reapply for all the certificates needed to run a plant which would take six months to a year. Among the approvals that are needed are the manufacturing licence, the halal certificate for chicken slaughtering and the veterinary health mark certification.
"We may not be able to service existing customers. Especially the licence to export to a few countries in Southeast Asia. If we were to reapply, it would take six to eight months and we would lose the customers.
"That's why we changed the method of takeover. When we take over, we will take parts of their liabilities. After deducting all the liabilities, we agreed on the RM9.45 million price," Chuah said.
Meanwhile, the other two LoIs that were also signed in February still stand and will kick in once the FBF acquisition is completed. The two LoIs are for the acquisition of assets belonging to Sinmah Breeders Sdn Bhd and Sinmah Livestocks Sdn Bhd.
Chuah said CAB is looking to announce an official dividend policy by the end of September, but declined to reveal further details, saying only that it will be discussed with the new board of directors.
The entry of Indonesian billionaire Anthony Salim as a substantial shareholder via a private placement earlier this year has helped CAB Cakaran's share price gain about 7% year-to-date, outperforming the FBM KLCI, which has lost 1.68%. Anthony has raised his stake in the group to 19.9% since.
The stock closed up one sen to RM1.68 a share, last Friday.