Medco to sell stake in power unit to strategic investors before IPO: Report
Thursday, April 3 2008 - 02:23 AM WIB
Standard Chartered Plc would help sell the stake and proceeds would be used to build power plants, Fazil Alfitri, president director of PT Medco Power Indonesia, said in an interview in Singapore Wednesday.
The private placement would be completed this year, he said, declining to elaborate. Medco Power planned to list its shares in Singapore in two years, he said. Medco Energi will retain a majority stake in Medco Power.
?We want to bring in a shareholder who is bigger than us through the IPO,? Alfitri said. ?That and a listing in Singapore will raise our credit ratings, which will improve the flexibility and terms of funding for us to do more power projects.?
Medco Power would sell as much as 49 percent through the private placement and initial public offering to raise cash to fund expansion, Alfitri said. The power producer has three gas-fired generators with a total capacity of 138 megawatts on Batam island, south of Singapore. It also has a contract to operate the 1,320-megawatt Tanjung Jati B power plant in Central Java.
The company planned to boost its assets to 750 megawatts and total capacity to 3,000 megawatts in five years, Alfitri said.
Medco, Japan?s Itochu Corp. and U.S. turbine manufacturer Ormat Industries Ltd. won a contract in 2006 to construct and operate the 340-megawatt Sarulla geothermal power plant on Sumatra island. Kyushu Electric Power Co., Japan?s fifth-largest utility, signed an agreement in May to join the group.
?Kyushu Electric is one of the largest operators of geothermal plants in Japan and it will strengthen the consortium by bringing the necessary experience to operate the plant, the biggest geothermal plant in the world,? Alfitri said. ?We already have the in-principle approval from the government for Kyushu?s participation.?
The company was expected to complete talks in August to secure US$600 million of debt from the Japan Bank for International Cooperation, the government?s main overseas lender, Alfitri said. The bank, known as JBIC, might provide a loan for 70 percent of the debt and credit risk insurance for the remaining 30 percent to commercial bank lenders, he said.
Mizuho Financial Group Inc. is the adviser for Medco Power. The plant would have a generating capacity of 100 megawatts by 2010 and another 200 megawatts in 2011, Alfitri said.(*)