Manhattan receives approval to acquire Indonesian power plant
Wednesday, June 29 2016 - 04:31 PM WIB
SGX-listed Manhattan Resources Limited (MRL or together with its subsidiaries, the Group) has received shareholders? approval at an Extraordinary Meeting held today to approve its proposed acquisition of a majority stake in PT Kariangau Power (PT KP).
?This proposed acquisition of a 92.18 stake in PT KP is in line with the Group?s strategy to add new revenue streams to broaden our earnings base, and will allow MRL to tap into the growing demand for electricity in Indonesia. In addition, the energy-related business is also an extension of our existing coal barging business,? said David Low, CEO & Managing Director of MRL, said in a statement on Wednesday.
Pursuant to the provisions in the Sale and Purchase Agreement, SLM Holding Pte Ltd, a wholly-owned subsidiary of the company, had on June 29, 2016 completed the Proposed Acquisition. The final purchase consideration after adjustment is approximately US$35.7 million.
Based on an independent valuation by BDO Advisory, the market value of the equity interests as at Dec. 31, 2015, is worth between $15.5 million and $53.3 million. The purchase consideration will be funded by internal resources, cash generated from operations and bank borrowings.
PT KP has been given the right by the Indonesian government to supply electricity exclusively within the Kawasan Industri Kariangau (KIK) zone for a period of 15 years from April 1, 2013. Currently, it owns and operates a 2 x 15W coal-fired steam power plant in the KIK zone in Balikpapan, East Registration No: 199006289K Kalimantan, Indonesia. Sited on a total area of about 40 hectares, the average utilization rate of the power plant is about 80 percent.
PT KP has entered into an agreement with an Indonesian state-owned company that distributes electricity in Indonesia, which has committed to purchase all the excess power that has not been sold to other customers. In addition PT KP?s power purchase agreement with a coal terminal operator in Indonesia, PT Dermaga Perkasapratama (DPP), also provides for minimum monthly guaranteed sales.
Demand for electricity in Indonesia is rising rapidly, especially in East Indonesia where demand is forecasted to grow at 11.2 percent per annum. PLN is targeting to increase Indonesia?s electrification ratio from 83.0 percent in 2014 to 99.4 percent by 2024, implying additional new generating capacity of 70GW or about 7GW per year on average2. In East Kalimantan in East Indonesia alone, projected production is expected to more than double to 6,702 GWh from 2014 to 20223. Kalimantan has been identified by the Indonesian government as a key economic corridor, with the KIK zone designated as an integrated industrial zone in Balikpapan for heavy industry, medium industry and warehouses, and may accommodate industries such as coal, oil and gas, commodities, aquaculture and other business sectors.
?Moving into the energy-related business in Indonesia is a natural extension of our coal barging business, which will also allow us to leverage the power generation experiences of some of our Board members,? added Low
Editing by Johannes Simbolon