This article first appeared in The Edge Financial Daily on March 27, 2020

KUALA LUMPUR: State-owned Worldwide Holdings Bhd intends to up its stake by buying an additional 40% stake in RM Pulau Indah power plant project, in which Tadmax Resources Bhd currently owns a 65% stake.

In a filing with Bursa Malaysia yesterday, Tadmax said it received a letter dated March 16 from Worldwide expressing interest to acquire the additional 40% equity interest in Pulau Indah Power Plant Sdn Bhd (PIPP) that owns the 1,200MW power plant project.

With the purchase of an additional 40%, Worldwide Holdings will control 75% of the power plant project’s shareholding. 

The project is estimated to cost RM3.3 billion.

Earlier this month, Tadmax announced that it signed a share sale agreement (SSA) to transfer a 35% stake in PIPP to Worldwide for RM58.45 million.

To recap, under a heads of agreement dated Sept 14, 2018, Tadmax was slated to partner Worldwide and Korean Electric Power Corp (Kepco) for the 1,200MW power plant under a proposed shareholding ratio of 40:35:25 respectively in PIPP, then known as Tadmax Indah Power.

However, Tadmax has not signed the SSA with Kepco for the sale of the 25% stake in PIPP.

Depending on Kepco’s undertaking in PIPP, the new offer by Worldwide is set to result in Tadmax having only a 25% interest in the power plant project, or even exiting the project entirely.

Tadmax said it notified Worldwide yesterday that it had no objection to Worldwide’s proposed interest to raise its shareholding in PIPP.

The two parties have agreed to move forward to liaise with all relevant governmental and regulatory bodies in procuring necessary approvals or consents, it added.

“Both Tadmax and Worldwide will proceed to negotiate on the terms and conditions of the sale, including the sale consideration after securing all the necessary approvals or consents from relevant governmental and/or regulatory bodies,” it added.

Selangor state-linked Worldwide was initially roped in by Tadmax into the project as a strategic partner, where it is tasked to leverage and participate in financing discussions with financiers. 

Kepco was introduced as a technical partner for the combined-cycle gas turbine power plant.

The engineering, procurement, construction and commissioning contract with the project contractor — an unincorporated joint venture comprising Posco Engineering & Construction Co Ltd, Mitsubishi Corp and PEC Powercon Sdn Bhd — was executed earlier this month.