Published March 19, 2009

YTL unlikely to rock the boat as PowerSeraya's new owner

By RONNIE LIM

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MALAYSIA'S YTL Group, the new owner of Singapore's PowerSeraya, is not expected to rock the boat at the island's second largest generating company, sources say.

Changes: YTL Corp MD Francis Yeoh and his brothers Yeoh Seok Hong and Mark Yeoh are expected to sit on PowerSeraya's board

But YTL Corp managing director Francis Yeoh and his brothers Yeoh Seok Hong and Mark Yeoh - the frontmen for the Singapore acquisition - are expected to sit on PowerSeraya's board.

And YTL is likely to bring in its own man, Thomas Ho, to oversee PowerSeraya's finances, sources add. Mr Ho is now finance director of YTL Power's 35 per cent Indonesian associate PT Jawa Power.

Yeoh brothers Seok Hong and Mark are understood to be in town this week to meet PowerSeraya's management. 'They will want to take a slow approach and are unlikely to rock the boat as far as running the business is concerned,' an observer said.

The sale of PowerSeraya to YTL by Temasek Holdings was officially concluded on March 6.

In a surprise development after Temasek postponed the sale due to poor market conditions, YTL managed to put forward an acceptable offer in December 2008. It paid $3.6 billion for PowerSeraya and took on $201 million of its net debt.

'About $2.2 billion was paid through a syndicated loan led by DBS Bank and arranged by Temasek, with the rest financed from YTL's own resources,' a source said.

The loan suggests that YTL used Temasek's 'staple financing' - a pre-arranged financing package to attract bids for generating companies from parties that might otherwise have had to scramble for finance because of the credit crunch.

Of the Yeoh brothers coming on to PowerSeraya's board, Seok Hong has greater experience in the power business, while Mark has been involved in the group's hotels and resorts.

Seok Hong, who was responsible for developing YTL's power and utility businesses, was in charge of the development and construction of the two Independent Power Producer stations it owns in Malaysia.

He is also involved in the group's construction activities, including the Express Rail Link between the Kuala Lumpur international airport and the city's Sentral Station.

Sources said the two Yeoh brothers will not meet Trade and Industry and Energy Market Authority officials in Singapore during this week's visit but will likely do so another time.

Earlier this month, Senior Minister of State (Trade & Industry) S Iswaran met officials of China Huaneng, which bought Tuas Power, kicking off a series of familiarisation visits to the new foreign owners of Singapore's three major generating companies.

PowerSeraya, with 2,670 megawatts of capacity, has embarked on an $800 million plan to install 1,550 MW of cogeneration units to produce steam, cooling water and electricity to petrochemical plants on Jurong Island. It also operates a $20 million desalination plant and also carries out oil trading.