KUALA LUMPUR (Sept 29): Electrical and mechanical engineering services provider Kejuruteraan Asastera Bhd (KAB) announced on Wednesday (Sept 29) that it has lodged a multi-currency Islamic medium-term note programme (multi-currency sukuk programme) of up to RM500 million in nominal value.
In a statement on Wednesday, KAB said the multi-currency sukuk programme lodged through its wholly-owned subsidiary KAB Energy Power Sdn Bhd, with a 30-year tenure, is based on the Shariah principle of Murabahah.
The electrical and mechanical engineering services provider added that the proceeds from the programme will be utilised to fund future energy-related value accretive developments and acquisitions in Malaysia and the Asia region, as well as refinance KAB’s existing borrowings.
“This will provide the group with the flexibility in its fund-raising exercise with varying amounts and tenures for optimal asset-liability matching through the capital markets,” it added.
KAB noted that Public Investment Bank Bhd has been appointed as the principal adviser, lead arranger and lead manager for the programme, which will be drawn upon in tranches.
“In this regard, Public Islamic Bank Bhd has expressed its intention to subscribe for the first tranche of the Multi-Currency Sukuk Programme,” KAB added.
Additionally, KAB also said that Danajamin Nasional Bhd has agreed to guarantee the first tranche.
“Tranches which are guaranteed by Danajamin have an equivalent of a ‘AAA’ rating as Danajamin is rated ‘AAA’ by both RAM Rating Services Bhd and Malaysian Rating Corp Bhd,” the group added.
KAB managing director Datuk Lai Keng Onn said the multi-currency sukuk programme is a significant milestone for the group as it enters the next level of growth in its energy business sector.
He said KAB is actively looking out for greenfield projects and brownfield energy assets, such as solar power generation, hydropower plants and biogas, as it sees tremendous growth in this sector.
“Therefore, this programme is a good opportunity for us to raise long-term funds in the capital market and be able to provide greater flexibility to manage our cash flows as well as tailor our debts issuance to meet the financing needs at lower interest rate,” he added.
Lai said the group will be able to capitalise on the cash flow coming from the debt issuance to support its expansion plans.
“The challenging economy landscape bolstered by the Covid-19 pandemic has not deterred KAB as we continue to grow the existing business regionally and enhance the green energy solutions business segment within the Asia region such as Vietnam, Indonesia and India, steering KAB to greater heights,” he added.
In an interview with The Edge in March, Lai said KAB was looking at tapping into the local debt market for the first time to raise up to RM500 million to finance its expansion into the energy efficiency solutions and energy generation segment.
KAB shares closed half a sen or 1.25% lower at 39.5 sen, giving it a market capitalisation of RM669.7 million.