MMC completes RM9.3b Malakoff buy

MMC completes RM9.3b Malakoff buy


May 3 2007


MMC Corp Bhd says it has completed the RM9.3 billion purchase of Malakoff Bhd's businesses, with Malakoff shareholders getting a windfall under a capital repayment scheme.
"Following the completion of this deal, Malakoff will be a cash-only company and will distribute to its shareholders RM10.35 per share through a capital repayment exercise," MMC said in a statement.


Malakoff will soon be delisted from the stock exchange, the group added.


The deal was the largest leveraged buyout ever undertaken in Malaysian corporate history, and was also the largest completed merger and acquisition exercise to date, MMC claimed.


"We are very pleased to have reached this distinctive point of the exercise. We believe MMC is well on its way to becoming a major utilities and infrastructure group with a global reach," group chief executive Feizal Ali said in the statement.


MMC bought Malakoff's businesses through its 51 per cent-owned Malakoff Corp Bhd, which is the new name for Nucleus Avenue (M) Bhd.


The remaining 49 per cent Malakoff Corp stake is held by key local and foreign financial institutions.


Malakoff Corp is the largest independent power producer in the country, with a potential effective generation capacity of over 5,000 megawatts (MW). This represents 24 per cent market share of the generation capacity in Peninsular Malaysia.


MMC said the debt portion of the acquisition was funded entirely through the issuance of Islamic bonds, in line with the call to promote Malaysia as a hub for Islamic debt securities.


In total, RM7.9 billion of Senior and Junior Sukuk (Islamic bonds) were raised by Malakoff Corp, which were fully taken up by local and foreign financial institutions and investors.


"Upon completion, the group's debt will be higher at the consolidated level.


"However, group debt servicing capacity remains comfortable as the majority of the borrowings are project finance-based at the level of the operating subsidiaries, which generate a steady stream of cash flows and are self-sustaining," Feizal said.


Malakoff is on a global expansion drive, particularly in countries that are making significant investments in infrastructure development.


Feizal said Malakoff's expansion overseas, which began in a significant way in 2003, has achieved considerable success.


In 2005, Malakoff secured equity interest in a RM9 billion Shuaibah independent water and power project in Saudi Arabia, together with other consortium partners.


Building on that footprint, the company secured an RM880 million award to develop, construct and operate a seawater desalination plant in Algeria in partnership with a subsidiary of Hyflux of Singapore.


Last November, Malakoff and other consortium members acquired an interest in the Dhofar Power Co in Oman, which holds a 20-year concession for the privatisation of the Salalah Power System.


Feizal said these international projects provide Malakoff Corp with an excellent platform for future expansion in the Middle East and beyond.