KUCHING: Reneuco Bhd (formerly known as KPower Bhd) proposed to undertake an issuance of redeemable convertible bonds (RCB), which will be divided into four main tranches, with an aggregate nominal value of up to RM350 million.
According to Reneuco in a filing with Bursa Malaysia, the RCB will mature on the date falling 36 months from the closing date of the first sub-tranche of Main Tranche 1 RCB.
The RCB shall bear interest from the respective dates on which they are issued and registered at a rate of 2.0 per cent per annum, payable semi-annually in arrears on Jan 30 and July 30 in each year, with the last payment of interest being made on the maturity date.
The proposed RCB issue is expected to raise gross proceeds of up to RM350 million, which will be utilised mainly to fund the group’s property development, solar photovolatic plant and hydro projects as well as working capital requirements..
On Wednesday, Reneuco entered into a conditional subscription agreement with Triton Capital Fund VCC, a variable capital company incorporated in Singapore, acting on behalf of and for the account of TCF Fund A (subscription agreement), pursuant to which the RCB will be issued by the company in four main tranches.
The RCB are transferable and/or tradable in accordance with the terms and conditions of the subscription agreement.
Reneuco said the proposed RCB issue will enable the company to raise fund expeditiously and cost effectively as the issuance has a pre-identified investor, which allows the company to save costs on roadshows and marketing for potential investors.
“The proposed RCB issue will enable Reneuco to raise funds via the hybrid market, that is between the debt market, where gearing and security or rating may be an issue, and the equity market, where current market conditions may not be conducive, as it provides flexibility to raise funds in stages when the need for funds arise, considering that the company has no intention to raise the entire RM350 million immediately,” said the company.
If gross proceeds of RM350 million are raised, Reneuco intends to utilise RM100 million each from the proceeds to finance the Kuala Nerus project and Nenggiri project.
The Kuala Nerus project will involve the development of affordable and mixed housing projects on government land in Kuala Nerus, Terengganu Darul Iman.
Wholly-owned subsidiary Reneuco Development Sdn Bhd has entered into a joint venture with the Terengganu state government via Pejabat Setiausaha Kerajaan Terengganu and Perbadanan Memajukan Iktisad Negeri Terengganu for the project, of which pre-development works has commenced, said Reneuco.
On May 10, 2022, Mikrogrid Lestari Sdn Bhd (MLSB), a 55 per cent-owned subsidiary of Reneuco via Reneuco Engineerring Sdn Bhd (RenRE), was selected as one of the successful bidders under the feed-in-tariff (FiT) e-bidding exercise conducted by Sustainable Energy Development Authority (SEDA) for the development of small hydro power in Malaysia.
Under the e-bidding exercise, MLSB shall develop small hydro power plants with a total capacity of 40.4 MW in Gua Musang, Kelantan with a basic FiT rate of RM0.2249 per kilowatt-hour.
“The Nenggiri project is expected to be completed in the first half of 2027. The proceeds of up to RM100 million from the proposed SCB issue shall be utilised to finance the construction costs of the project including but not limited to the cost for design works, mechanical and electrical works, civil works and professional fees another related fees to the financiers,” said Reneuco.
The company intends to utilise RM40 million of the proceeds to fund the development of a 50MW solar photovoltaic plant in Pekan, Pahang (LSS4 solar project), which is expected to be completed in second half of 2023.
Reneuco also plans to utilise RM21 million to finance the hydro projects in Kota Marudu, Sabah and RM10 million for a solar photovoltaic plant project in Ladang Bikam, Perak.Another RM20 million will be set aside to partly fund the acquisition of Adat Sanjung Sdn Bhd (ASSB).
The company also intends to utilise up to RM39.85 million to fund its working capital requirements to facilitate the initial expenses for up-coming projects and/or investment opportunities within 24 months from the completion of the RCB issue.
“In addition to that, Reneuco expects to secure new EPCC projects within the sustainable energy and utilities sectors, and the company has also been actively participating in several tendering process via its wholly-owned subsidiary, Reneuco Digital Sdn Bhd. As such, the amount allocated is intended to serve as a “war-chest” or as standby funds for the company to embark on future business project(s)/investment(s),” it added.
In January 2023, Reneuco had raised RM6.61 million from a private placement or up to 10 per cent of the company’s total number of issued shares.
From the proceeds, the company has used up about RM3.1 million, including RM1.16 million for the Kuala Nerus project, RM0.93 million for East Coast Rail Link (ECRL) independent power producer project and RM0.73 million for working capital requirements of existing operations.
On the group’s prospects, Reneuco said its plans include integrating the renewable energy segments across all of its business segments as part of its effort to offer one-stop, wide-ranging solutions to cater for increasing demand for environmental compliance while simultaneously solidifying its positioning in the sustainable space.
“Reneuco group intends to grow its renewable energy segment in three specific areas which are engineering, procurement, construction and commissioning, including project management consultancy, asset ownership and renewable energy technology as well as products in the near future.
“Last year, the group began to make significant moves towards this goal into a reality by forging partnerships with Smart Sabah RE Sdn Bhd, Menteri Besar Kedah Incorporated and other technology partners which had created a trail for the company to advance its steps into the sustainable space.
“The group foresees a bigger demand for renewable energy technology and products in the future fuelled by the increasing concern for climate change and support for environmental, social and governance consideration which has led to an accelerated demand for cleaner energy sources.”
Reneuco said the group firmly believes that the renewable energy industry will remain lucrative as the transition to a cleaner energy future is underway compounded by the strong renewable energy industry value chain in Malaysia, from the manufacturing stage to the service supply stage.
“Based on the energy mix in Malaysia, hydropower is currently the highest contributor to the total renewable energy use.
“On the other hand, despite Malaysia being one of the main suppliers of solar photovoltaic panels, the local solar power uptake leaves much to be desired. This translates to many untappped potential which the group believes in being addressed through the net energy metering (NEM) system.
“The NEM system allows for excess energy produced from solar panels fixed on private or commercial buildings to be sold back to the grid based on the Feed-in-Tariff and large-scale solar systems this creating a new economic market ecosystem.
“Given this scenario, the group stands in good stead of capitalising on the numerous opportunities that lie ahead within the renewable energy industry,” said Reneuco.
