Keppel completes Senoko purchase within $462m

Deal within indicative price; asset to be held in business trust
Lynette Khoo, Business Times 1 Sep 09;

KEPPEL Corporation's environmental solutions unit Keppel Integrated Engineering (KIE) has completed the acquisition of Senoko Incineration Plant (SIP) from the government.

The deal was done within the indicative price of $462 million, which was mutually agreed between KIE and the government on a willing-buyer, willing-seller basis.

The asset is being held in a business trust - Senoko Trust - with KIE as the sponsor and investor of the trust. Plans to publicly list the business trust are still in the bag.

'We continue to seek a listing of this asset when suitable market conditions return,' said a Keppel spokesman. There is no timeframe for the listing.

With this acquisition, which is funded internally, KIE will be the only private operator of incineration plants treating general waste in Singapore.

SIP's capacity to treat 2,400 tonnes of waste per day will enable KIE to treat more than a third or 35.8 per cent of Singapore's total volume of waste sent for incineration.

'Our agreement with the Singapore government for incineration services will create steady recurring income and generate strong cash flow for Keppel, which is particularly attractive in the current times of economic uncertainty,' said KIE deputy chairman Michael Chia.

KIE will provide incineration services for 15 years starting today to the National Environment Agency. KIE will also maintain and repair SIP, and upgrade the flue gas treatment system of the plant.

Last September, the government decided to divest SIP through a trade sale instead of a public listing of a business trust due to market conditions.