Tanjong Public Limited Company ("Tanjong") announced today that the Group has entered into a conditional share purchase agreement with EDF International SA ("EDFI") for the acquisition of EDFI’s entire 100% interest in its power generation assets in Egypt, for a total purchase consideration of US$307 million (approximately RM1.16 billion).

Kuasa Nusajaya (L) Ltd, a wholly-owned subsidiary of Tanjong Energy Holdings Sdn Bhd, which is in turn a wholly-owned subsidiary of Tanjong, will acquire from EDFI two power generating companies, i.e. EDF Suez Gulf Power SAE ("Suez Gulf") and EDF Port Said East Power SAE ("Port Said"), and a common operating company for both, EDF Egyptian Operating Company SAE ("EEOC").

EDFI is the wholly-owned international power arm of Electricite de France SA ("EdF"). EdF, the state-owned French national utility company, is incorporated in France and listed on Euronext Paris.
 
Suez Gulf and Port Said each own a gas-fired thermal power plant with a generating capacity of 682.5MW located at each end of the Suez Canal in Egypt. The plants were built by EdF within the framework of a "build, own, operate and transfer" (BOOT) principle with the Egyptian authorities. Both plants commenced commercial operations in 2003 and have registered a combined turnover of US$174 million and profit after taxation of US$21.6 million in 2004.

The purchase consideration will be funded by bank borrowings and/or Tanjong Group's internally generated funds.

Tanjong commenced exclusive negotiations with EDFI on July 19, 2005 and completion of the proposed acquisition has been targeted for the first quarter of 2006. The proposed acquisition is subject to the conditions precedent in the share purchase agreement which includes the approval of the shareholders of Tanjong at an Extraordinary General Meeting within 50 business days from the date of the share purchase agreement.

Upon completion of the proposed acquisition, the Tanjong Group's total generating capacity will almost double to 2,855MW. Tanjong currently owns and operates three gas-fired power plants in Malaysia with a total generating capacity of 1,490MW.

The proposed acquisition represents a strategic opportunity for the Tanjong Group to expand its investment in the power generation business internationally and capitalise on its existing core competencies and expertise particularly in the operation and maintenance ("O&M") of power plants, with a view to positioning the Tanjong Group as a reputable provider of quality power plant O&M services worldwide. In January 2005, the Tanjong Group, as part of a consortium, was awarded the 2,000MW and 160 million imperial gallons per day Taweelah B independent power and water project in the United Arab Emirates.

In addition, the proposed acquisition will enable the Tanjong Group to invest in a stable cashflow generating business with an immediate income stream. Both plants are already operational and each is governed by a 20-year Power Purchase Agreement ("PPA"), which commenced in 2003, with the state-owned Egyptian Electricity Holding Company ("EEHC") as the sole off-taker and EEHC's payment obligations guaranteed by the Central Bank of Egypt. Payments under the PPA and the Central Bank of Egypt guarantee are both denominated in US dollars.

Date Posted : 29 Nov 2005
Source : Kuala Lumpur