1. INTRODUCTION
Melewar Industrial Group Berhad (“MIG” or “the Company”) wishes to announce that Mperial Power Ltd (“MPL”), a wholly-owned subsidiary of Melewar Steel Engineering Sdn Bhd, which in turn is a wholly-owned subsidiary of MIG, has today signed a Memorandum of Understanding (“MOU”) with PT Medco Power Indonesia (“MPI”), in respect of MPL intending to dispose to MPI a stake of 20% of Phase 1 under Siam Power Generation Public Company Limited’s (“Siam Power”) and 60% of Phase 2 under a newly incorporated company named Siam Power Phase 2 Company Limited (“SPP2”) (“the Sale Shares”) (“the Proposed Disposal”).
MPI’s offer price for 20% of the shares in Phase 1 is subject to satisfactory due diligence by MPI and will be based on a valuation done by a reputable and independent party acceptable to MPI and MPL (“the Parties”); and has to satisfy MPI’s expected rate of return.
MPI’s offer price for 60% of the shares in SPP2 is USD9.0 million (“Purchase Price”) and is based on zero debt and liabilities. The Purchase Price is subject to satisfactory due diligence by MPI. The due diligence period of sixty (60) days for SPP2 will start upon signing of the MOU.
2. BACKGROUND OF MPL, MPI AND SIAM POWER
2.1 Information on MPL
MPL was incorporated on 15 December 2005 under the Offshore Companies Act, 1990 as a private limited company. The present authorized share capital of MPL is USD13,000 comprising 13,000 ordinary shares of USD1.00 each whilst the issued and paid-up capital is USD100.00 comprising 100 ordinary share of USD1.00 each.
MPL is an investment holding company.
2.2 Information on MPI
MPI is a company incorporated under the laws of Indonesia with its business registered office at The Energy, 50th Floor, Jalan Jend Sudirman, Kav 52-53, Jakarta 12190. MPI is an established power plant owner and operator in Indonesia.
2.3 Information on Siam Power
Siam Power was incorporated on 9 February 1996 under the laws of Thailand and having its principal place of business at 555, Soi Sukhimvit 63 (Ekhamai), Sukhumvit Road, Klongton-Nua, Wattana, Bangkok 10110 as a public limited company. The present authorized and paid up share capital of Siam Power is THB3,345,547,000 divided into 334,554,700 shares of THB10 each as at the date hereof. Siam Power is a power generation company.
As at the date hereof, MPL owns 98.4% of the issued shares in Siam Power. The remaining 1.6% of the issued shares in Siam Power is owned by E Power Pte Ltd, a company incorporated in British Virgin Islands owning 0.5% and Nippon Power Management Pte Ltd, a company incorporated in Singapore owning 1.1%.
Siam Power has completed a 160 MW natural gas fired combined cycle cogeneration power plant located in the SSP Rayong Industrial Park at Ban Khai in the Rayong Province of Thailand under Phase 1. 90 MW of Siam Power’s electricity under Phase 1, is sold to EGAT under the Power Purchase Agreement of the Small Power Producer program of the Ministry of Energy of Thailand and the remaining power is sold to G Steel Public Company Limited (“G Steel”), a steel mill in the same industrial park pursuant to the Amended and Restated Energy Services Agreement dated 19 August 2008 (the “ARES Agreement”).
Due to the default by G Steel in payment for power supplied by Siam Power, Siam Power has stopped the supply of power to G Steel since end 2011. As at the date of this announcement, G Steel is undergoing a corporate restructuring which is expected to complete by the first quarter of 2013, whereupon, they will resume offtake of power from Siam Power.
Siam Power has been awarded a second Power Purchase Agreement by the Electricity Generating Authority of Thailand (“EGAT”) to supply another 90 MW of electricity. This new electricity supply will be dispatched from a new plant to be construed on the land adjacent to Phase 1 and the project will be developed as Phase 2 which shall be undertaken by SPP2.
3. RATIONALE
The purpose of the MOU is to set forth the preliminary terms and conditions of the sale and purchase of the Sale Shares leading to the execution of the Conditional Share Sale Agreement (“CSSA”) Phase 1, Share Sale Agreement (“SSA”) Phase 2, Shareholders’ Agreement (“SHA”) between shareholders of Siam Power, SHA between shareholders of SPP2, and such other documents as shall be advised by MPL’s and MPI’s advisors (“the Formal Documents”) on or before sixty (60) days from the date of the MOU.
4. SALIENT TERMS OF THE MOU
The salient terms of the MOU include, amongst others, the following :
4.1 Terms of Payment
(i) USD5 million as down payment (“Downpayment”) for the Purchase Price of 20% shares in Phase 1 shall be paid by MPI to MPL at the signing date of CCSA. The signing of the CCSA for Phase 1 and SSA for Phase 2 will be executed simultaneously after the completion of due diligence by MPI. If the conditions precedent are not fulfilled by 30 June 2014, the Downpayment shall be refunded by MPL to MPI. If the conditions precedent are fulfilled by the said date and MPI fails to complete the purchase of 20% of Phase 1, the Downpayment shall be forfeited. As collateral to the CSSA, MPL shall pledge its 40% shares in SPP2 to MPI;
(ii) USD2.0 million of the Purchase Price of 60% shares in Phase 2 shall be paid by MPI to MPL upon the execution of the SSA Phase 2. This payment shall be referred to as “the Phase 2 First Payment”. If any of the conditions precedent for SSA of Phase 2 is not fulfilled, the Phase 2 First Payment shall be refunded by MPL to MPI.
(iii) Balance of Purchase Price of 20% of the shares of Phase 1 (“the Phase 1 Second Payment”) shall be paid by MPI to MPL at a closing time to be agreed between the Parties, upon fulfillment of all conditions precedent stipulated in the CSSA; and
(iv) Balance of Purchase Price of Phase 2 (“the Phase 2 Second Payment”) shall be paid by MPI to MPL at a closing time to be agreed between the Parties, upon fulfillment of all the conditions precedent stipulated in the SSA.
4.2 Exclusivity
An exclusivity period of sixty (60) days from the date of the MOU, unless further extended by the Parties, will be granted to MPI to facilitate MPI to complete their legal, accounting and tax due diligence in relation to this transaction at MPI’s own cost and expense.
4.3 Termination
In the event that MPL and/or MPI are not able to execute the Formal Documents within the sixty (60) days from the date of the MOU or MPI notifies MPL that it does not wish to pursue this investment opportunity, the collaboration sought by the MOU shall automatically terminate unless extended in writing pursuant to mutual agreement of the Parties hereto.
5. INTERESTS OF MAJOR SHAREHOLDERS AND DIRECTORS
None of the Directors and/or major shareholders of the Company and/or persons connected with them have any interest, direct or indirect, in the MOU and the Proposed Disposal.
6. STATEMENT BY THE DIRECTORS
The Directors of MIG, having taken into consideration all aspects of the MOU, are of the opinion that the MOU is in the best interest of the Company.
A further announcement on the Proposed Disposal will be made upon execution of the Formal Documents or upon occurrence of any material event.
This announcement dated 15 January 2013. |