Sarawak Cable's plan to sell its Indonesian mini hydro hits a wall

KUALA LUMPUR (Oct 18): Sarawak Cable Bhd (SCable) said a restraining order has prohibited the power cable and wire producer from proceeding to dispose of its Indonesia-based wholly owned subsidiary PT Inpola Mitra Elektrindo (IME) to Kejuruteraan Asastera Bhd (KAB) for RM10,000 cash.

Under the deal, KAB was also supposed to absorb the debts and liabilities of IME estimated at RM61.5 million as part of SCable's efforts to restructure its banking facilities.

In a Bursa Malaysia filing on Tuesday (Oct 18), SCable said the High Court of Sabah and Sarawak on Sept 29 issued a restraining order on the company for a period of three months. As a result, SCable on Oct 13 sent a letter to inform KAB about the restraining order.

"During the restraining order, the company will not be able to proceed with the share sale and purchase agreement. Therefore, the company will not be able to proceed with the fulfilment of the conditions precedent and pre-handover issues," said SCable.

SCable added that KAB will be notified once the restraining order expires.

IME operates a mini hydro electric power plant in Pakpak Bharat, North Sumatera, Indonesia, with an installed capacity of 11 megawatts.

In September 2010, IME signed a power purchase agreement (PPA) with Indonesia's PT Perusahaan Listrik Negara (Persero) for the installation, operation and maintenance of the mini hydro. Under the PPA, IME was required to develop, own and operate an eight-megawatt mini hydro for a period of 20 years from the commercial operation date of the plant, which was achieved on Oct 12, 2021.

"Further developments in relation to the proposed disposal will be announced accordingly," said SCable.

The proposed disposal was expected to be completed by the fourth quarter of 2022, which would see SCable incurring a net loss of RM53.12 million net of transaction costs or 13 sen loss per share.

SCable shares ended the morning session down 0.5 sen or 11.11% to four sen on Tuesday, bringing it a market capitalisation of RM14.36 million. KAB shares, meanwhile, were up 1.5 sen or 3.61% to 43 sen, valuing it at RM768.18 million.