TIDMORCP
RNS Number : 0536L
Oracle Power PLC
20 December 2018
20 December 2018
Oracle Power PLC
("Oracle" or "the Company")
Update on Memorandum of Understanding and Consortium
Agreement
Oracle Power PLC (AIM:ORCP), the UK energy developer of a
proposed combined lignite coal mine and mine mouth power plant (the
"Project") located in the south-eastern Sindh Province of Pakistan,
Thar Block VI, announces a change to its partners to the Memorandum
of Understanding signed in November 2017 ("2017 MOU"), details of
which were announced on 21 November 2017. Beijing Jingneng Power
Company Limited ("BJPC") has now replaced Sichuan Provincial
Investment Group Co. Limited as a party to a Memorandum of
Understanding of 19 December 2018 (the "MOU").
BJPC is a Chinese coal power producer and electricity supplier,
listed on the Shanghai Stock Exchange with a market capitalisation
of circa US$3 billion. At present the company holds controlling
stakes in over 22 companies with installed capacity of 10.8GW and
non-controlling stakes in a further 15 companies with installed
capacity of 13.3GW.
It is proposed that BJPC will take-up an equity interest of 78%
in the Project. BJPC may invite other parties to invest in the
Project, although it is envisaged BJPC will maintain majority
ownership. PowerChina International Group Limited ("PowerChina"),
the other original partner under the 2017 MOU, has reconfirmed its
ongoing support and is a party to the MOU. It is proposed that
PowerChina will take-up an equity interest in the Project of 9.9%,
as previously envisaged. Accordingly, Oracle will retain an equity
interest of 12.1% in the Project, in line with previous
disclosures. Oracle, BJPC and PowerChina (together the "Parties")
have formalised the amendment through the signing of the MOU and a
new Consortium Agreement ("CA"). The CA has been formally submitted
to the relevant authorities in Pakistan.
It is proposed that BJCP will have a majority of the board
positions at the Project company level in recognition of its
majority equity interest. Certain matters shall be reserved for
unanimous agreement, including, inter alia, dividend policy and
terms and costs of key contracts, such as Engineering Procurement
and Construction ("EPC") and Operations and Maintenance ("O&M")
contracts. It is proposed that PowerChina shall be EPC contractor
for the Project as originally envisaged and that BJPC shall be the
O&M contractor.
In all other respects, the terms of the MOU remain the same as
those contained within the 2017 MOU, with the key terms as
follows:
-- The proposed equity ownership and responsibilities of the
Parties remains subject to final agreement in relation to various
definitive agreements including, inter alia, share subscription
agreement, shareholders agreement, EPC contracts, O&M contracts
and funding agreements (together the "Definitive Agreements").
-- BJPC and PowerChina to be responsible for arranging all debt
financing for the Project through Chinese banks. A debt equity
ratio of 75:25 is anticipated.
-- Oracle historical spend on the Project, to be capitalised as
a contribution towards its equity interest.
-- Oracle to remain responsible for arranging the necessary
permissions and approvals within Pakistan, whilst PowerChina is
responsible for obtaining political and financial support for the
Project in relation to the Chinese Government and the
China-Pakistan Economic Corridor. Oracle and PowerChina will also
provide technical oversight for both the mine and the power
plant.
-- As previously announced, a total capital requirement for the
Project is estimated to be approximately US$1.6 billion. The
intention is this will be now firmed up in discussion with the
Parties.
-- As with the 2017 MOU, it is envisaged that work will be
undertaken in two phases, the first phase being to conclude due
diligence and the second phase to conclude the Definitive
Agreements, and reach financial close.
Key terms of the CA
The Parties are pleased to confirm that they have also signed an
updated CA, which runs in parallel with MOU. The CA is a formal
requirement of the Private Power and Infrastructure Board ("PPIB"),
the regulator of the Pakistan power industry, and is part of the
process that leads to the issue by PPIB of, firstly, the Letter of
Intent ("LOI") and, subsequently, as PPIB's final approval, the
Letter of Support ("LOS"). As with the MOU, it records the
intention of the Parties to proceed to formal agreement to
cooperate and collaborate in respect of investing in, and
developing, the Project. The Parties have submitted an updated
application to the PPIB for the issue by the PPIB of a LOI. Please
see the Company's announcement of 12 February 2018 and its interims
accounts for the six-month period to 30 June 2018 for further
information on the LOI and LOS. The Company expects the LOI process
to recommence as a result of the amended MOU.
As a requirement of the PPIB, the CA further records that BJPC
must hold equity of at least 20% in the power plant company and all
three parties must hold at least 51% of the equity for six years
following the issue of the LOS.
Shahrukh Khan, CEO of Oracle, said:
"We have signed a new MOU and are pleased to bring BJPC on as a
partner in the Project. We remain grateful to PowerChina for their
continued support throughout this process and believe we have the
group to take this Project through to conclusion. We are mindful
that this transaction has taken longer than many envisaged to
complete and would like to thank our shareholders for their
patience. We are pleased that Oracle will be able to hold on to a
significant stake in a project of international significance,
evidenced by its inclusion on the Priority List of the China
Pakistan Economic Corridor.
The inclusion of our historic expenditure, several multiples of
our current market capitalisation, as part of Oracle's contribution
to the Project should help minimise dilution to shareholders in the
PLC whilst retaining a significant interest in this sizeable
asset.
After a frustrating period of inactivity in terms of newsflow,
we believe that the Company is firmly in a position to press
forward with the Project and we look forward to updating
shareholders in due course."
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Oracle Power PLC +44 (0) 203 102
Shahrukh Khan 4807
Stand Hanson Limited (Nominated Adviser) +44 (0) 207 409
Rory Murphy, James Harris, Jack Botros 3494
Brandon Hill Capital Limited +44 (0) 203 463
Oliver Stansfield 5000
Peterhouse Corporate Finance +44 (0) 207 220
Charles Goodfellow 9791
Blytheweigh +44 (0) 207 138
Tim Blythe, Camilla Horsfall, Megan Ray 3204
Notes For Editors:
About PowerChina International Group Limited:
PowerChina is a state-owned enterprise and is the owner of
Sinohydro as well as the Hydrochina Corporation, China Renewable
Energy Engineering Institute, Shandong Electric Power Company
("SEPCO") and numerous electric power design institutes and power
construction companies. PowerChina provides planning, survey,
design and engineering, finance, construction, installation, and
operation and maintenance for power and infrastructure projects. In
2016, PowerChina had revenues of GBP36.8 billion, net assets of
GBP62.2 billion and employed 187,000 staff. PowerChina has already
successfully secured financial close on several CPEC
(China-Pakistan Economic Corridor) listed projects and proceeding
with these power plant project constructions in Pakistan.
Further information can be found at the company's website:
http://en.powerchina.cn/
About BJPC
Beijing Jingneng Energy Co is a Chinese coal power producer and
electricity supplier, listed on the Shanghai Stock Exchange with a
market capitalisation of circa US$3 billion. At present the company
holds controlling stakes in over 22 companies with installed
capacity of 10.806GW and non-controlling stakes in a further 15
companies with installed capacity of 13.295GW. The total assets of
the company stand at 51.57 billion yuan (circa US$7.5bn) and net
assets of 24.04 billion yuan (circa US$3.5bn). The company
generates approximately 40% of the total annual electricity
consumption in Beijing through its operations.
This information is provided by RNS, the news service of the
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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