Tenaga-Techventure deal seen as win-win situation
Thursday, March 18 2004 - 11:56 PM WIB
The share-swap deal, which will result in Tenaga holding a majority stake in Techventure, will enable the packaging material company to assume the business and assets of TCIL.
Tenaga will get a listed vehicle to explore other opportunities in the coal business, while Techventure will be able to ditch its struggling corrugated paper business and go into coal supply with a guaranteed uptake by Tenaga.
The proposed back-door listing exercise will reduce Tenaga?s stake to between 45.9 per cent and 49 per cent, but it will still be the single largest shareholder of TCIL with full management and board control.
Techventure had proposed to acquire the entire interest in TCIL for RM139.4 million, to be settled by the issuance of new shares at a price between RM1.20 and RM1.50.
The proposed deal will see Techventure issue shares equivalent to RM97.65 million to Tenaga. Another TCIL shareholder, Nik Sallahuddin Nik Hussein, who owns 30 per cent, will get Techventure shares worth RM41.85 million.
TCIL?s wholly-owned subsidiary, Dynamic Acres Sdn Bhd, holds a 99 per cent stake in PT Dasa Eka Jasatama.
Dasa Eka owns the exclusive mining rights to five concession areas in south Kalimantan, Indonesia, and supplies coal to TNB Fuel Services Sdn Bhd, Tenaga?s wholly-owned subsidiary since last year.
The contract is in perpetuity until coal reserves are exhausted. Dasa Eka has five concession areas totalling 70,000ha and a concession period of 30 years. To date, it has a proven offtake of 27 million tonnes.
The injection of TCIL into Techventure will provide a channel for Tenaga to realise its investment if it wants to, as Techventure shares are more liquid than unlisted TCIL shares.
It is understood that Tenaga will eventually reduce its stake to 30 per cent and will likely remain as the controlling shareholder of TCIL.
Observers said Tenaga?s move makes sense, resulting in the company being the controlling shareholder of a listed entity with coal mining as its core business.
Techventure, which currently manufactures and distributes corrugated cartons, corrugated fibreboards, rubber insulation materials for air-conditioners and water tanks, and rotational-moulded plastic products, is expected to hive off these loss-making businesses and focus on coal mining as its core business.
Upon completion of the exercise, Techventure ? which posted net losses of about RM27.55 million and RM27.56 million for its financial years ended December 2002 and 2003 respectively ? will be in the black in 2004.
Stockbroking house Mohaiyani Securities said this is because Techventure will benefit from a minimum offtake of the three million tonnes a year from Tenaga.
TCIL has contracted to supply coal to Tenaga at US$28 a tonne for five years.
The brokerage house expects the supply of coal to Tenaga to increase as the latter?s consumption for coal rises to meet the increasing demand for power.
Following the change in the national fuel policy in favour of coal, demand for coal is expected to rise in tandem with the increased demand for power.
Mohaiyani Securities said coal accounted for 16.2 per cent of Tenaga?s total fuel mix and this has escalated to 46.5 per cent in the company?s first quarter.(*)