FOR AN INDEPENDENT POWER UTILITY (IPU) COMPANY WITH DEBT OF OVER RM1.0 BILLION

Client

Power Generation and Distribution Entities (NUR Power)

Products & Services

• Operational restructuring
• Corporate & debt restructuring

Description of Project

Client

The Client is the shareholder of an operating independent power utility company based in the norther state of Malaysia. The IPU subsidiary is a single-purpose entity which has constructed and owns the power generation and power distribution assets.

Background

The consortium of lenders has appointed receivers over the ultimate holding company in relation to a debt exposure of over RM1.0 billion. Our team members were involved in the engagement, holding key roles in the receivership team. 

Challenges & Expectations

On inception, the power generation facility is 95% completed, the steam combined cycle plant is put into preservation due to dispute with the turn-key EPC contractor (a renown international power generation organization). There were also contractual complications in the power off-take agreement of over RM1 billion, the off-take agreement was at risk to termination due to non-compliance of terms.  

In addition to the operational challenges, the team is also required to carry out a debt restructuring exercise to resolve the debt owing to the lenders. 

Our Role on the Project

Scope of Services

Provision of operational & debt restructuring scope

Solutions / Outcomes Delivered

Dispute with the turn-key contractor was resolved with works undertaken to complete the facility. Thereafter decision was  made to commence power generation, bringing in positive cash flow of RM2.5 million a month as opposed to an operating loss of RM500,000 per month. By then, the off-take agreement has also been re-negotiated.

Backed by feasibility studies which substantiated business viability, a restructuring scheme was promoted to key stakeholders. The scheme was approved, and operation continued. By 2011 monthly cashflow surplus was RM 8 million.

Company was then put up for sale by inviting proposal from investors. By 2012, a bid of over RM850 million was accepted. 

Fund was raised through a SUKUK program to finance the acquisition. The fund raising program was completed within 9 months, by which time the monthly cashflow had reached RM10 million. 

Debt to the consortium of lenders were restructured and settled with the proceeds from the sale of the IPU assets.