OM Sarawak gets full funding for ferro alloy smelting project
KUCHING: OM Materials (Sarawak) Sdn Bhd (OM Sarawak) has secured full funding for its ferro alloy smelting project (Phase I) in Samalaju Industrial Park, Bintulu, with the sealing of a financing facility amounting to US $ 315 mil (RM 970.36 mil) with four local and foreign lenders.
The lenders are Export-Import Bank of Malaysia Bhd, RHB Bank Bhd, Standard Chartered Bank Malaysia and Malayan Banking Bhd.
StandChart is OM Sarawak’s financial advisor in the smelting project.
OM Holdings Ltd (OMH), which owns an 80% equity interest in OM Sarawak through wholly owned unit OM Materials (S) Pte Ltd, said the successful execution of the project financing facility agreement (FA) and corre- sponding project support agreement (PSA) represented a significant milestone in the project development.
“Together with committed equity from OM Sarawak’s shareholders, Phase I of the project is now fully-funded,” it added in an annoucement with the Australian Stock Exchange on Tuesday.
Phase I’s capital expenditure, according to OMH chief executive officer Peter Toth, is estimated at US $ 397 mil.
OMH’s partner in the joint-venture project is Cahya Mata Sarawak Bhd (CMSB) via wholly owned subsidiary Samalaju Industries Sdn Bhd, which holds the remaining 20% stake in OM Sarawak.
“The FA is comprised of limited recourse senior project finance debt facilities totalling US $ 215 mil and RM310mil for the total capital
cost of the project’s Phase I ferrosilicon production facility, and another RM 126 mil credit line for the issuance of performance and payment guarantee to the power provider, Syarikat Sesco Bhd, as part of OM Sarawak’s obligations under the power purchase agreement.
“Syarikat Sesco, a unit of Sarawak Energy Bhd, will supply 500 MW for 20 years to OM Sarawak.
“As is customary for a project finance facility, the project is backed by OM Sarawak’s shareholders – OM Materials (S) Pte Ltd and Samalaju Industries Sdn Bhd – and its sponsors OMH and CMSB, as set out in the PSA.
“The PSA governs the rights and obligations of the project’s shareholders and sponsors. The obligations and liabilities of the OMH Group and CMSB Group under the PSA are serveral and pro-rata to their respective 80% and 20% shareholdings in OM Sarawak,” added OMH. OMH said the PSA would lapse and the project would become nonrecourse 18 months after the satisfaction of pre-agreed project com- pletion tests.
Toth said during his presentation at the Metal Bulletin 14th Ferro Alloy Conference in Hong Kong last week that OM Sarawak was expected to sign the project’s engineering, procurement and construction (EPC) contract agreement in the current quarter.