TNB’s unit proposes sukuk wakalah of up to RM4b

PETALING JAYA: Tenaga Nasional Bhd's (TNB) 51%-owned subsidiary Southern Power Generation Sdn Bhd (SPG) has proposed to issue a sukuk wakalah of up to RM4 billion in nominal value.

In a filing with Bursa Malaysia yesterday, TNB said the sukuk wakalah will be issued in one lump sum and will have a tenure of up to 20 years from the date of issuance.

SPG plans to use the proceeds to fund up to 80% of the total project costs including payment and/or reimbursement to the sponsors (TNB and SIPP Energy Sdn Bhd) on the issue date of the sukuk wakalah in respect of the total project costs incurred prior to the financial close.

The project refers to a power purchase agreement dated Sept 5, 2016 entered into between SPG and TNB, supplemented by the supplemental agreement dated May 29, 2017.

The issuance of the sukuk wakalah will increase TNB's consolidated gearing, the quantum of which is dependent on the amount issued.

For illustrative purposes, based on TNB's consolidated balance sheet ended May 31, 2017 and assuming that the maximum amount of RM4 billion nominal value is issued, TNB's consolidated gearing would increase from 39.8% to 42.3%.

The lodgement with Securities Commission Malaysia was made yesterday. CIMB Investment Bank Bhd (CIMB IB) is the sole principal adviser for the sukuk wakalah.

CIMB IB and Maybank Investment Bank Bhd are the joint lead arrangers and joint lead managers while CIMB Islamic Bank Bhd and Maybank Islamic Bhd are the joint shariah advisers for the sukuk wakalah.

The sukuk wakalah has been assigned an indicative rating of AA-IS by Malaysian Rating Corp Bhd.

TNB's share price remains flat at RM14.58 this morning with 1.36 million shares changing hands. It has a market capitalisation of RM82.5 billion.