KNM, Zecon ink agreements with Gulf Asian for RM17b jobs at Teluk Ramunia

by **hlk** Mon 25 Jul 2011, 21:21

KUALA LUMPUR: KNM GROUP BHD [] and ZECON BHD []
have inked heads of agreements with Gulf Asian Petroleum Sdn Bhd (GAP)
to undertake projects worth an estimated RM17 billion at Teluk Ramunia,
Johor.

In a filing Monday, July 25, KNM said the agreements were to
undertake building a 150,000/200,000 bpd petroleum refinery and
400,000/525,000 mtpa polypropylene unit for GAP with a total project
value of US$5 billion (RM15 billion).

The other project is to construct a petroleum product storage
terminal facility comprising four terminals with a total storage
capacity of 2.328 million cubic meters, with supporting infrastructure
and auxiliaries worth RM2 billion.

For the refinery project, KNM said it would together with Zecon
and/or a Korea or Chinese contractor form a consortium to undertake the
refinery project.

KNM said the consortium would take up to 20% equity in GAP estimated
at US$180 million (RM540 million), adding that the project would be
funded by 30% equity and the balance via project financing using export
credit agencies and/or other financial instruments including Sukuk
issuance.

The project would be completed within 40 months from financial close, it said.

As for the RM2 billion storage project, KNM said it would form a consortium with Zecon to carry out the job.

KNM said the a special purpose vehicle would undertake the project,
adding that it would subscribe up to 30% equity in the SPV, while the
balance would be held by GAP.

KNM and GAP will form a joint venture company to undertake the
operation and maintenance of the facilities upon completion for period
of 25 years with the first five years having a reputable operator as its
partner, it said.

The storage project will be completed within 18 months after financial close, it said.

KNM said GAP would arrange for financial guarantee from a local
investment fund for up to RM1.5 billion during the CONSTRUCTION []
period to be converted into long term loan thereafter and a
facilitation fund of up to RM300 million while KNM will arrange a Sukuk
issuance of up to RM1.5 billion to cover project financing during
construction.

“The Johor State Government has approved 650 acres of land in Teluk
Ramunia for the Projects and GAP is in discussion with the State
Government for its equity participation which has yet to be finalised.

“GAP has appointed Evercore Partners New York as its financial adviser,” said KNM.