JAKS' JV secures US$1.4 billion funding for Vietnam power plant

by **Cals** Tue 22 Sep 2015, 23:22

JAKS' JV secures US$1.4 billion funding for Vietnam power plant

By Esther Lee / theedgemarkets.com | September 22, 2015 : 5:44 PM MYT

KUALA LUMPUR (Sept 22): [size=16]JAKS Resources Bhd ([You must be registered and logged in to see this image.] Valuation: 1.10, Fundamental: 0.65)'s joint venture (JV) partner China Power Engineering Consulting Group Co. Ltd (CPECC) has on Sept 19 secured US$1.402 billion financing for the proposed construction of the power plant (IPP) in Vietnam.

In a statement issued this afternoon, JAKS said the principal financiers for the US$1.4 billion borrowing are Industrial and Commercial Bank of China (ICBC), China Construction Bank Corporation (CCB) and Export-Import Bank of China (Exim Bank).

Subsequent to this financing agreement between CPECC and its principal financiers, JAKS' wholly-owned subsidiaryJAKS Hai Duong Power Company Ltd, which will be undertaking the IPP project, entered into a shareholders' loan facility agreement with CPECC's subsidiary China Power Engineering Consulting Group (HK) Investment Co., Ltd, to accept a term loan facility in an amount not exceeding US$1.4 billion, representing 75% of the total project cost.

JAKS added that the IPP project will be funded by 75% debt and 25% equity.

JAKS received approval from shareholders on Sept 15 to proceed with the proposed 50:50 JV agreement between JAKS' subsidiary JAKS Power Holding Ltd and CPECC to invest in the IPP project in Vietnam.

"This is another key milestone for JAKS. With the passing of shareholders' resolution and signing of loan agreements, we will be able to formalise financial close for the IPP project before the end of October 2015.

"We are also delighted to see the support from our financiers, ICBC, CCB and Exim Bank, which certainly underscores the bankability of the IPP project in Vietnam," said JAKS chief executive officer Ang Lam Poah in today's statement.

Ang added that once the JV receives financial closure, it will move to ground breaking and the commencement of construction work of the power plant itself. He is confident that the power plant will be completed by 2020.

To recap, the JV proposed to build a 25-year build-operate-transfer 2x600MW coal-fired thermal power plant project at Phuc Commune, Kinh Mon District in Hai Duong Province, Vietnam.

The US$1.87 billion power plant project will be executed in two separate contracts. The first engineering, procurement and construction (EPC) contract valued at US$1.06 billion was awarded to CPECC-led consortium, while JAKS' wholly-owned subsidiary Golden Keen Holdings Ltd was awarded with the second EPC contract worth US$454.5 million for civil and M&E engineering works.

This contract helps to boost JAKS' construction order book up to RM2.52 billion from RM632.4 million as at end-June 2015.

JAKS' share price staged a rebound after it hit a low of 75 sen last month. The stock closed at RM1.09 today, up one sen with 4.21 million shares traded.

(Note: The Edge Research's fundamental score reflects a company's profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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