Kapar Power Station

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In July of 2004, Malaysian power producer Kapar Energy Ventures Sdn. Bhd. (KEV), completed its purchase of a 40% stake in the 2,420-MW Kapar Power Station from Tenaga Nasional Bhd (TNB). KEV, the project company which was to own and operate the Kapar plant, was originally a 100% subsidiary of Malakoff Bhd. But following the purchase of the power plant, Malakoff transferred 60% of the company to Tenaga. This deal was agreed to in order to facilitate the divestment of Kapar, which was intended to reduce TNB’s debt burden. Kapar was a multi-fuel thermal power station operating on three primary fuels: coal, natural gas and oil and a standby fuel, distillate, for the gas turbines. The power plant had orignially cost TNB RM5.22 billion and had started operations in 1985. KEV began operations on July 1, 2004. Tenaga had a 25-year PPA agreement with Kapar. The total cost of the stake was about 4.6 billion ringgit (approx. US$1.1 billion) of which RM4.2 billion was the purchase prive and the balance was for various short-term operational needs of KEV. In June of 2004, KEV closed on a RM3.4 billion Islamic bond issue, comprising RM3.4 billion of notes issuance under the Syariah Principle of Bai' Bithaman Ajil (BaIDS) and RM200 million of Murabahah working capital facility. The BaIDS was supported by the issuance of primary and secondary notes in bearer form. There was to be 29 tranches of notes with maturities ranging from one to 15 years. AmMerchant Bank and RHB Sakura were the lead arrangers for the fully-underwritten bond issue. Other arrangers included KAF Discounts Bhd, Malaysian International Merchant Bankers Bhd and Bank Muamalat Malaysia Bhd.