Published December 3, 2008

YTL ups the ante to clinch PowerSeraya

Deal comes just a week after Temasek stopped tender for the genco

By CONRAD TAN

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(SINGAPORE) In a stunning about-turn, Temasek Holdings has sold electricity generating firm PowerSeraya to Malaysia's YTL Power International for $3.8 billion just a week after it postponed the sale indefinitely due to poor market conditions.

Mr Yeoh: Busy deploying the YTL group's war chest of more than RM11 billion

YTL Power will pay Singapore investment company Temasek $3.6 billion and assume $201 million of PowerSeraya's net debt.

'After we stopped the tender process last week, YTL Power put forward an unsolicited proposal which met our requirements. We are pleased with the successful outcome of the PowerSeraya divestment,' Gwendel Tung, director of investment at Temasek, said in a statement.

Francis Yeoh, managing director of YTL Power as well as its parent company YTL Corp - both listed on Bursa Malaysia - said that he was 'delighted' to acquire PowerSeraya, which will give YTL Power 'significant participation in the Singapore energy market'.

Sources told BT that Mr Yeoh flew to Singapore with other senior YTL Power executives to meet Temasek representatives. Over the past two days, they rapidly hammered out a deal.

YTL Power will pay Temasek $3.6 billion and assume $201 million of Power- Seraya's net debt.

Just last week, on Nov 25, Temasek said that it had stopped the tender process for the sale of PowerSeraya that it had started on Oct 7.

'In light of the market conditions, we have decided not to proceed further,' Ms Tung said in a statement at the time.

YTL Power had been one of two shortlisted bidders; the other was a consortium led by Hong Kong's CLP Group.

DBS Bank is providing $2.25 billion of credit facilities to YTL Power to fund part of the purchase.

PowerSeraya is the last of three power generating companies that Temasek put up for sale under its planned divestment of the gencos, first announced in July last year.

The first, Tuas Power, was sold to China Huaneng Group for $4.24 billion in March, while Senoko Power was bought by a consortium led by Japan's Marubeni Corp for $3.97 billion in September.

With a registered generating capacity of 2,940 megawatts (MW) and a licensed capacity of 3,100MW, PowerSeraya is the second largest genco here after the 3,300MW Senoko Power, providing about 27 per cent of Singapore's electricity needs.

The deal is subject to the approval of YTL Power's shareholders. If approved, the acquisition is expected to be completed by the end of February next year.

For the financial year ended March 31, 2008, PowerSeraya reported revenues of $2.79 billion and net income of $218 million.

Its net debt at the end of March was $201 million, after adjusting for a $100 million dividend paid to Temasek in September this year.

Wong Kim Yin, managing director of investment at Temasek, said that, with the sale of PowerSeraya, 'Temasek would have fulfilled its commitment to help develop a competitive power generation market in Singapore'.

Mr Yeoh, 54, one of the most powerful businessmen in Malaysia, has been busy deploying the YTL group's war chest of more than RM11 billion (S$4.6 billion) in cash to buy overseas assets on the cheap.

In October, the group bought Macquarie Group's entire interest in Singapore-listed Macquarie Prime Reit at a sharp discount to the property trust's net asset value, in an all-cash deal worth $285 million.