KNM to partner with China-based firm for UK power plant Ben Shane Lim
10 Oct 2017
KNM is expected to announce a joint venture with a China-based counterpart later today to finance the project. If so, it would be a long-awaited catalyst for the group.
According to sources, the Chinese party will be funding the construction cost of the entire project. Early estimates of the project placed the cost around £151 million (RM841.9 million) in capital expenditure (capex) for Phase 1 alone. It is understood that the Chinese party will take on the role as the engineering, procurement and construction (EPC) contractor for the project.
Note, KNM has an 80% stake in the build, own and operate project currently. Sources said that KNM will not relinquish equity in the project. Meanwhile, the deal will allow KNM to defer payment to the EPC contractor till after the plant begins operations.
There is also speculation that the scale of the project could also be upsized ahead of time, from the initial 18mw. Recall, the project was mooted with the possibility of scaling up to 80mw in the future. However, it has proven to be a stumbling block for KNM as well.
With a net debt of RM961.03 million and less-than-stellar earnings in the past couple of years as the company ventured into renewable energy, KNM has struggled to finance the project.
KNM has a market capitalisation of RM618.5 million.
Source: The Edge Markets