KUALA LUMPUR (May 8): Singapore-listed Asiatic Group (Holdings) Ltd is disposing of its 30% stake in Maju Intan biomass power plant in Perak, marking its exit from the troubled biomass project after more than a decade.

Asiatic is disposing its stake in the project company Maju Intan Biomass Energy Sdn Bhd (MJE) to Etagreen Management Sdn Bhd for RM10 plus financial support of approximately RM34.5 million, it said in a statement.

“When completed, our exit from the Maju Intan Biomass Power Plant will reduce our contingent liabilities and improve our financial position. We will strive to take more strategic beneficial actions for the Group to unlock value for shareholders,” said its managing director Tan Boon Kheng in a statement dated May 8.

Asiatic first bought the 30% stake in MJE back in 2009, for RM10 million. The group had provided corporate guarantee for MJE’s financing, and extended loans to the company over the years.

In July 2022, the group defaulted on RM122.2 million payments linked to the 12.5 megawatt Maju Intan biomass power plant project.

A proposal to dispose of the asset to interest buyer Hualang Renewable Energy did not go through, following several extensions in 2021.

From RM122.2 million, the amount due by Asiatic was reduced to RM54.5 million, including estimated costs of about RM2 million, following a settlement reached between the creditor Maybank and the appointed receiver, it said.

With the MJE disposal inked on Monday, Etagreen will set aside the RM34.5 million for costs and repayment to Maybank. The white knight, which is involved in processing of palm biomass for fuel in power plants, is already leasing the project from MJE’s receivers, Asiatic said.

Boon Kheng and his brother Tan Boon Yew, who is a director of a subsidiary of Asiatic, have personally paid an aggregate amount of RM500,000 as part of the settlement.

Asiatic, meanwhile, will pay RM19.5 million including its share of costs. It has proposed a 13-for-10 rights issue to raise up to S$6.1 million for the purpose.

It was reported that key Asiatic shareholders, including Boon Kheng and his family, will undertake to subscribe their full allotment of the rights shares.

The group has also secured undertakings from Boon Kheng, Lecca Capital and one other shareholder to subscribe to excess rights shares for it to raise at least S$3.3 million.

“After its sale of the MJE biomass plant, Asiatic will be left with only one remaining active power plant, located in the Phnom Penh Special Economic Zone in Cambodia, and it is reviewing its options and future plans for this remaining energy asset,” it said.

Upon completion of the sale to the white knight, it will be able to refocus managerial attention to its core business of firefighting and protection, it said.