KUALA LUMPUR (Dec 12): Edra Global Energy Bhd president and executive director Datuk Mark Ling is breathing easier now compared to a year ago when he was thinking hard about how to raise the much-needed fresh capital to ease the company’s tight cash flow and to kick-start power projects that have been granted by the government, according to the Edge weekly in its latest edition.
In the weekly’s latest cover story, the Edge’s Ben Shane Lim wrote that new shareholder China General Nuclear Power Corp Ltd (CGN) is going to pump RM10 billion into Edra for expansion locally and abroad after paying RM9.83 billion cash for the takeover and assuming Edra’s net debt of RM6.8 billion.
The Edge said having RM10 billion fresh capital was something Ling could only dream about when Edra’s outgoing shareholder, 1Malaysia Development Bhd (1MDB), sank deeper into a financial quagmire with debts ballooning to over RM45 billion.
It said that like it or not, CGN, whose debt papers are rated A3 by Moody’s, is perceived to be in a better position to grow Edra. Tenaga Nasional Bhd (TNB) ( Valuation: 1.20, Fundamental: 1.30) was defeated by the Chinese state-owned energy group in the bid for Edra.
The Edge reported that in an interview with the magazine, Ling started off by refuting the speculation that his team was handsomely rewarded for concluding the sale of Edra.
“Contractually, there are no entitlements or bonuses for the management for [successfully] selling Edra. However, my team has really put in their best effort over the past year and I believe they are deserving of a fair reward,” says Ling, whose first task when he joined the company in October last year was to list Edra on Bursa Malaysia.
The initial public offering did not materialise, although its rival Malakoff Bhd ( Valuation: N/A, Fundamental: N/A), which had delayed such an exercise for at least three years, managed to raise RM3.6 billion this year.
The Edge said that Ling is probably facing a different sort of stress now — the challenge to deliver returns to shareholders once things are moving in Edra.
He says the team won’t have much time to waste. They will have to figure out ways to double Edra’s current installed capacity in order to earn the lucrative returns that the Chinese shareholder is expecting.
The Edge further said that for expansion in Malaysia alone, CGN is expected to inject RM5 billion to get the projects off the ground. There will not be a repeat of Project 3B — the 2,000mw coal-fired power project that Edra was forced to sell to TNB because it lacked the capital to develop it.
It said that all in, CGN is expected to inject over RM10 billion to ensure that Edra can continue expanding. In contrast to CGN’s estimated total asset value of RMB398.47 billion (RM266.4 billion), the sum is small. For perspective, CGN’s installed capacity of over 25.4gw (25,400mw) is almost five times Edra’s. In fact, the group has almost 40gw of capacity, including 13.8GW of nuclear power capacity that is already under construction.