TIDMORCP
RNS Number : 0356X
Oracle Power PLC
21 November 2017
Oracle Power PLC
21 November 2017
ORACLE POWER PLC
("Oracle" or the "Company" or the "Group")
SIGNING OF MEMORANDUM OF UNDERSTANDING ON PROJECT FUNDING
-- MOU signed with two major Chinese SOEs
-- Gross project cost c.US$ 1.6 billion, as previously announced
-- Proposed debt : equity ratio of 75 : 25
-- Oracle's historic development costs to be recognised as part
of the Company's equity holding in the Project
-- Chinese SOEs exclusively responsible for arranging project debt
Oracle Power PLC (AIM:ORCP), the UK energy developer of a
combined lignite coal mine and mine mouth power plant located in
Block VI of the Thar desert in the south-eastern Sindh Province of
Pakistan, is pleased to announce that, further to the announcements
of 27 September 2017 and 1 November 2017, it has now signed a
Memorandum of Understanding ("MOU") with Sichuan Provincial
Investment Group Co. Limited ("SCIG") and PowerChina International
Group Limited ("PowerChina"), two Chinese State-owned Enterprises
(together with Oracle, the "Parties"), which records the intention
of the Parties to proceed to formal agreement to cooperate and
collaborate in respect of investing in, setting up, constructing,
owning and operating the Company's flagship Thar project (the
"Project"). The Parties intend to work together to enter into
definitive agreements in order to reach financial close as soon as
possible.
Key terms of the MOU
The MOU specifies that the Project will be funded in cash by the
Parties, directly into the Company's Pakistani subsidiaries and
that it is proposed that SCIG, PowerChina and Oracle will have
equity holdings in the Project of 78 per cent., 9.9 per cent. and
12.1 per cent. respectively. SCIG may consider, as appropriate, at
any time to invite other co-sponsors/co-investors to the investment
of the Project and SCIG will maintain the position of majority
shareholder in each subsidiary of Oracle.
The Parties intend to develop the Project in a two-stage
approach. The first phase will include further legal and financial
due diligence, led by SCIG.
The second phase is expected to involve SCIG endeavouring to
secure the approval for the investment in, and the development of,
the Project from the Chinese government within three months of the
completion of the first phase, after which a final development
decision will be made, which is expected to take the Project to
financial close. It is anticipated that the Parties will then
provide the equity funding to the Project companies, proportionate
to their proposed eventual equity holding in the Project. Equity
funding during the second phase is also expected to be contributed
by the Parties in proportion to their proposed eventual equity
holdings in the Project. A further adjustment to the equity
holdings of the Parties is expected, to reflect costs already
incurred by Oracle in developing the Project up to the date of the
MOU. It is anticipated that the financing of the Project will be by
way of both debt and equity, in the ratio of 75:25. SCIG and
PowerChina shall be solely responsible for arranging the debt,
exclusively from Chinese banks. SCIG and PowerChina are expected to
provide all security and guarantees that may be required as part of
the bank debt.
The MOU specifies that SCIG is to have a majority of board
positions at the Project company level. 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"). PowerChina shall be EPC contractor for the Project.
The O&M contracts shall be decided by SCIG.
Oracle will retain responsibility for applying for and obtaining
all licences, approvals, permissions as may be required by the
Pakistani Government authorities. SCIG and PowerChina shall be
responsible for all liaison and approvals required through the
Chinese authorities, including in relation to the China Pakistan
Economic Corridor.
Shahrukh Khan, CEO of Oracle, said:
"I am delighted to confirm the formal signing of the MOU. This
development is a transformational step for Oracle and the
culmination of months of work between the various Parties. We are
very pleased to have formalised our relationship with both
PowerChina and SCIG and look forward to working with them to
develop this significant project.
As previously announced, the total funding requirement for the
Project is expected to be around US$1.6 billion, with funding being
provided at the Pakistani Project company level. The Parties shall
continue to optimise and reduce costs where applicable. The Board
understands this to be one of the largest private sector
investments in Pakistan, anticipated to be soundly funded by
substantial Chinese SOEs, and supported by being on the priority
list of the China Pakistan Economic Corridor.
"As evidenced with the recently announced power plant proposal
to the Pakistani power industry regulator, further steps required
to achieve financial close are firmly moving forward and the
Company hopes to reach financial close in the first half of 2018. I
look forward to updating shareholders on subsequent developments as
they arise."
For further information please contact:
Oracle Power PLC +44 (0) 203
Shahrukh Khan 580 4314
Brandon Hill Capital Limited +44 (0)203
Oliver Stansfield 463 5000
Peterhouse Corporate Finance +44 (0) 207
Charles Goodfellow 220 9791
Grant Thornton UK LLP
Salmaan Khawaja, Richard Tonthat, +44 (0) 207
Daniel Bush 383 5100
Blytheweigh
Tim Blythe, Camilla Horsfall, +44 (0) 207
Megan Ray 138 3204
Fortbridge Consulting +44 (0)7966
Matt Beale, Bill Kemmery 389196
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.
Notes for Editors:
About PowerChina:
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 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 are
proceeding with these power plant project constructions in
Pakistan.
About SCIG:
SCIG is a Chinese state-owned investment company which invests
in and manages projects in a range of sectors, including energy
resources, transportation, communications, raw materials,
electromechanical, agriculture and forestry. SCIG is China's fourth
largest and Sichuan Province's largest local electrical power
investment company, having a total install capacity of 36.04GW. In
2016, SCIG had revenues of GBP0.9 billion and net assets of GBP3.3
billion; it employs approximately 7,000 staff.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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