Lekir Bulk Terminal (LBT) has raised M$445 million ($117 million) via structured project bonds to finance a M$310 million jetty terminal in Lumut in the Malysian state of Perak. The bonds, rated AA3(s) by Rating Agency Malaysia (RAM), have a zero coupon and will be repaid in 19 semi-annual instalments between 2003 and 2012. The aggregate average yield on the bonds is around 8%, ranging from 6.20% at the short end to 8.65% for the longer maturities.
"We have received a very favourable response from the market. The bonds are fully subscribed, with the short and medium-term tranches oversubscribed," says Jerry Yeoh, head of capital markets at HSBC, which was lead manager of the issue.
The new jetty terminal will be used to unload coal for delivery to a new 2,100 megawatt (MW) power station being built in Lumut. The power station is owned by Tenaga Nasional unit TNB Janamanjung, which has signed a 25-year agreement to use LBT's facilities. "Counterparty risk for LBT is deemed low, as TNB Janamanjung being the main obligor is financially backed by Tenaga Nasional ... At this point, however, the rating is constrained by the inherent construction risk of the project," says RAM.
LBT has a fixed price turnkey contract with Leighton Contractors (M) for the construction of the terminal, but any delays to completion would push back the start date for the fixed monthly payments agreed with TNB Janamanjung. The first coal handling line is scheduled to become operational by 30 June 2002 and the second by 30 October 2002. "We are allowing for six to eight months overshoot [in the financing] in terms of the timeframe," says Yeoh. In the event of any delay, he adds, Leighton will be penalized.
Once completed, the new terminal will be operated by Lumut Maritime Terminal, which already has bulk cargo handling facilities at Lumut Port.
LBT has a 25-year lease on the terminal and was set up with equity of M$106.5 million. The company is 40% owned by the Perak state government, 40% by Halim Rasip Holdings, a private entity, and the remaining 20% is in the hands of Malakoff.