Metis Energy L02 0.00% has announced the completion of the proposed disposal by its wholly-owned subsidiary SLM Holding of 397,785 shares in the capital of PT Kariangau Power for IDR151.6 billion ($13.6 million).

 

The shares were sold to PT Bayan Resources and PT Bayan Energy. PT Kariangau Power has entered into a loan agreement with PT Bayan Resources to repay the former&rsquo s outstanding loans due to Metis Energy L02 0.00% .

 

Following the completion of the disposal, PT Kariangau Power ceased to be an indirect subsidiary of Metis Energy. 

 

Metis Energy says that one of its independent directors, Henry Wong Chuen Yuen, has resigned on June 24, for " personal reasons" .

 

The company, which used to be called Manhattan Resources, is now focused on renewable energy projects. It used to have interests in the coal mining industry in Indonesia and is also involved in property development in China.

 

Wong was appointed to the board on Jan 21 2021.

 

According to a separate statement by the Corrupt Practices Investigation Bureau on June 23, Wong was charged on the same day for corruption.

 

Up till Feb 2022, Wong was with the National Research Foundation, which referred the case to CPIB. Both CPIB and NRF are entities that report to the Prime Minister' s Office.

 

Wong was then NRF' s director of programmes and central innovation cluster, and a member of the Built Environment Technology Alliance project evaluation panel at the material time.

 

Besides Wong, another individual, Lee Tze Boon, director of an entity called Smart Illumination was also charged.

 

According to CPIB, between May and August 2021, Wong had allegedly agreed to accept a 30% stake in SI from Lee as a reward for advancing SI&rsquo s business interest in its application for grant funding from BETA.

 

Metis Energy' s group general manager Alan Yau: " There&rsquo s no turning back, because the entire world is going into renewable energy to sustain economic growth."

 

Russia&rsquo s invasion of Ukraine has caused prices of fossil fuels to shoot back up, negating the much-needed push to­ wards renewable energy that is trying to close the cost gap between the two types of energy sources. However, the new management at Metis Energy is solidly stick­ ing to its plans to transform its business into a green energy services provider.

 

Metis Energy, formerly known as Manhat­ tan Resources until May 5, runs coal-fired pow­ er plants and provides ship chartering to haul coal in Indonesia. The company has also ven­ tured into China&rsquo s property market, where it is now developing Ningbo Yinzhou Manhat­ tan Tower, a mixed-use office and commercial project slated for completion in 2025.

 

However, business in these two areas has not been great for the company. Manhattan Re­ sources, which has a December year-end, re­ ported frequent full-year losses since FY2014, barring FY2018 and FY2020 when it was prof­ itable. The company has also been on the SGX Watchlist since December 2018.

 

In its most recent FY2021, the company again recorded a loss of $1.7 million versus earnings of $8.07 million for FY2020.

 

The bulk of the red ink came from the $12.63 million impairment booked for its power plant business due to lower budgeted revenues and higher coal prices. Revenue was up 1% over the same period to $9.2 million.

 

Diversifying for a turnaround

 

To reverse its fortunes, the company has ap­ pointed a couple of corporate heavyweights to its board and made new management ap­ pointments.

 

Tang Kin Fei, group president and CEO of Sembcorp Industries between 2005 and 2017, was appointed as chairman in January 2021, bringing with him years of experience running a conglomerate with a heavy emphasis on en­ ergy and utilities.

 

More recently on May 4, Tan Tong Hai, CEO of StarHub between 2013 and 2018, joined as a non-independent director. Besides holding directorships, both Tang and Tan hold sizea­ ble stakes in the company. Tang has a deemed interest of 25 million shares, or 0.83%, while Tan holds 40 million shares.

 

Part of the management changes at Metis Energy included bringing in former StarHub CEO Tan Tong Hai (left) as a non-independent director and former Sembcorp Industries group president Tang Kin Fei (right) as chairman.

 

On April 28, Metis Energy&rsquo s former CEO Low Yi Ngo also left this post although his fa­ ther Low Tuck Kwong remains the controlling shareholder with a stake of just over 80%.

 

A key plank of Metis Energy&rsquo s move into green energy is the $4.8 million acquisition of Athena Energy Holdings last October, paid for via $4.3 million in cash and over 14 mil­ lion new shares at 3.9 cents each, representing 0.47% of Metis Energy&rsquo s enlarged share capital.

 

Athena develops, owns and operates renew­ able energy assets in Asia and Australia and the name change to Metis Energy reflects the new direction in renewable energy.

 

The acquisition of Athena has also brought its founder and CEO Alan Yau into the fold of Metis Energy, where he now holds the key ex­ ecutive role of group general manager. Yau was previously CEO of Sembcorp China Holding, where he managed the conglomerate&rsquo s power plant and water treatment assets.

 

From Yau&rsquo s perspective, renewable energy is the way to go. &ldquo There&rsquo s no turning back be­ cause the entire world is going into renewable energy to sustain economic growth. The fos­ sil fuels and coal-fired power plants will not be a sustainable solution,&rdquo says Yau in an in­ terview with The Edge Singapore.

 

He believes that the &ldquo stars are aligned&rdquo for Metis Energy to transform. For one, demand for renewable energy is growing, especially in Asia. In addition, costs of renewable technol­ ogy such as solar panels have dropped &ldquo sig­ nificantly&rdquo compared to 10 years ago, giving investors of these assets a better yield. &ldquo Pric­ es will continue to soften and with economies of scale, prices will only go down,&rdquo he adds.

 

Yau is also confident of broader policy sup­ port across the region as many countries have given their word as part of the Paris Accord, thereby more likely to be &ldquo very receptive and encouraging&rdquo towards what companies like Metis Energy are trying to do.

 

The financial services industry has jumped on the sustainability bandwagon in a big way with lenders becoming more supportive of re­ newable energy projects, he adds.

 

In the past, financiers found it more effi­ cient to fund huge capex projects such as giant coal-fired plants rather than smaller renewa­ ble projects because they had to do due dili­ gence for all projects regardless of size. &ldquo But in recent years, we are seeing lenders making a paradigm shift. Now, they&rsquo re very support­ ive,&rdquo Yau says.

 

On March 30, Metis Energy announced it had secured a US$14 million ($19.5 million), non-recourse loan from a climate fund based in Switzerland called responsAbility Invest­ ment AG. This secured loan will be used to finance a pipeline of solar projects in Vietnam by Metis Energy.

 

A non-recourse loan is one where, in the case of default, a lender can seize the loan collateral. In contrast to a recourse loan, the lender cannot go after the borrower&rsquo s other as­ sets, even if the market value of the collateral is less than the outstanding debt.

 

Yau says lenders providing non-recourse loans have the &ldquo highest level of scrutiny&rdquo as they lend based purely on the metrics and cre­ dentials of the borrower.

 

Although the Vietnam venture is small com­ pared to other &ldquo mega projects&rdquo out there, Yau believes it can secure such favourable terms because of the way Metis Energy structures and delivers its projects.

 

&ldquo In the past, when people mention renewa­ ble energy projects, you can only invest by giv­ ing full equity or corporate guarantees or you have to accept much higher costs. But now, if you deliver it well, you will get recognised by even European financial institutions which represent the highest standards in ESG, project delivery and customer credentials,&rdquo says Yau.

 

Business model

 

So what is Metis Energy&rsquo s business model? The company will fund projects it has secured, be they powered by solar or wind. It will then appoint engineering, procurement, and con­ struction (EPC) contractors. Once the project is commissioned, Metis Energy will take over the project and maintain it for 20 years, mak­ ing revenue by selling the renewable power generated to users.

 

Unlike project owners who go for the cheap­ est contractor by default, Yau maintains his choice has got to be one whose delivery quality is &ldquo most suitable in terms of lifecycle costing&rdquo .

 

To Yau, this is important as Metis Energy plans to run these projects for about two dec­ ades so operation and maintenance costs have to be taken into account. &ldquo If the system doesn&rsquo t perform, there is no way I can recover my in­ vestment and earn my returns,&rdquo he reasons.

 

On the side of demand, Metis Energy works with customers trying to join the decarbonisa­ tion trend, partly because the customers&rsquo own clients are imposing sustainability criteria on their business partners and suppliers.

 

The way Yau sees it, using solar energy is a rather accessible way to decarbonise, and Metis Energy makes its projects more attrac­ tive by charging users a tariff at a discount to the national grid tariff.

 

On top of that, users get to own the renew­ able energy certificates, not Metis Energy. This allows users to show their own customers they have done their part to decarbonise.

 

However, investors do not seem to be very enthusiastic about Metis Energy&rsquo s new busi­ ness thus far. Trading of its shares remains thin, with no trades done on some days. Year to date, shares of Metis Energy are down 4% and last trading at 4.8 cents on July 15, although there was a brief spike to as high as 8 cents in early June. At current levels, the company has a market value is around $144 million.

 

Existing coal business

 

Given Metis Energy&rsquo s renewable energy focus, management has made a &ldquo conscious decision&rdquo to let the existing coal power plant and real estate business take a back seat. For one, the company will not be committing further in­ vestment into the Ningbo project.

 

Although Yau did not specify what will be done with the coal business, he says a key part of the transformation into Metis Energy &ldquo is to be able to exit from the non-renewable energy businesses so that we can be a purely renewable energy platform&rdquo .

 

When asked if there was a timeframe to divest the coal segment, Yau says any deal to be done &ldquo depends on the timing, valuation, [and] depends on finding the right off-taker,&rdquo adding that the company will act with urgen­ cy but will not rush into things. In any case, it still has the support of controlling share­ holder Low whose main business is in the In­ donesia-listed coal miner Bayan Resources.

 

But why would Low, having made his for­ tune in coal, want to pivot one of his business­ es to green energy that is directly competing with the coal business?

 

Yau simply says that Low is a &ldquo savvy&rdquo busi­ nessman with a diversified portfolio. &ldquo Metis Energy has decided to pursue the renewable energy business and transform Manhattan, changing its name so that we can have a clear cut from the traditional businesses. That&rsquo s the direction that we will go forward, and we have the full support of our shareholders on that.&rdquo

 

Even with the current conflict in Ukraine causing countries like Germany and France to turn to fossil fuels again, Yau says there is &ldquo no turning back&rdquo for Metis Energy. &ldquo The board and shareholders are fully aligned, the management team will continue to drive this business and just focus on delivering the tar­ gets they have set, and be a pure renewable energy player. Coal may remain relevant in many developing economies but that&rsquo s not a sector for us.&rdquo

 

METIS Energy, the company formerly known as Manhattan Resources, believes that it can chart a new direction with renewable energy projects in markets such as Indonesia, the Philippines and Bangladesh.

 

Its management has &ldquo sufficient expertise and resources&rdquo to evaluate investments in these countries, the watch-listed company said in response to queries from the Securities Investors Association (Singapore), or Sias, on Sunday (May 8).

 

Metis underwent a board shake-up early last year, when it was still a coal-mining company. Former Sembcorp Industries chief executive Tang Kin Fei became its chairman, while Sembcorp independent director Ajaib Hari Dass was appointed lead independent director. The company recently changed its name on Apr 28.

 

Metis is now repositioning itself as the renewable energy company in Asia and Australia, by providing sustainable power to 2 segments: commercial and industrial users and utility customers.

 

&ldquo The board and the management have the proven track record to deliver the utility-scale energy projects in Indonesia, the Philippines and Bangladesh, and their working knowledge and the skill sets complement each other as a team,&rdquo Metis said in its Sunday filing.

 

In October 2021, the company acquired Athena Energy Holdings, which has a presence in key renewable energy markets across Asia and Australia. In its FY2021 annual report, Metis (then Manhattan Resources) said that it is constructing 26MW of rooftop solar facilities to supply electricity to a unit of Huafu Fashion, a Vietnamese yarn producer.

 

Asked by Sias about the financial profile of Huafu and counterparty riks, Metis said that the manufacturer has a production capacity of up to 280,000 spindles of yarn and 20,000 tons of dyeing yarn.

 

The project construction was funded by responsAbility Investments, a Swiss sustainable asset manager that provided a US$14 million syndicated senior secured loan to Athena to finance projects that reduce carbon emissions in Vietnam.

 

&ldquo The 2 climate finance funds managed by responsAbility have carried out their independent assessments on the credit risks of Huafu,&rdquo Metis said in the filing.

 

Separately, Sias noted that Metis is seeking shareholder approval to adopt a new performance share scheme and a share option scheme. The association questioned if this is the appropriate time to approve the schemes, given that Metis has only just started on its new growth trajectory.

 

In response, the company cited the need to provide incentives for business growth. &ldquo The board is of the view that it is an appropriate time to approve the schemes to retain and align the key management for the common goal to transform the company into a leading renewable energy company in the region,&rdquo it said.

 

A POWER plant operator owned by coal shipper Manhattan Resources Manhattan Res^: L02 0% is selling 2 plots of land in East Kalimantan for close to 271.3 billion rupiah in an interested person transaction, the board disclosed after a conditional land sale and purchase agreement on Thursday (Dec 9).

 

Mainboard-listed Manhattan Resources' 86.1 per cent-owned Kariangau Power subsidiary plans to sell the land, which has a combined size of more than 271,270 square metres, to a company linked to controlling shareholder Low Tuck Kwong and his family.

 

The sale is expected to yield a gain of nearly S$19.5 million, and the proceeds will be used for capital expenditure, development cost and working capital for the pipeline projects in the company' s renewable energy business, the board said.

 

The land had previously been reserved for the expansion of the company' s power generation business. But the board said that the deal would let Manhattan Resources realise its property investment, since the land is vacant and not generating any income, with rental income likely to remain " restricted or limited in the foreseeable future" amid the Covid-19 pandemic.

 

The net book value of the land was S$6.51 million as at Dec 31, 2020, and no net profit or loss was attributable to it.

 

On a pro forma basis, the board said that earnings per share would have jumped from 0.35 Singapore cent to 1.05 cent had the sale gone through on Jan 1, 2020.

 

The company' s pro forma net tangible assets (NTA) would have risen from 2.81 cents a share to 3.37 cents if the sale were completed on Dec 31, 2020, it added.

 

The buyer, Dermaga Perkasapratama, is 87.4 per cent owned by Bayan Resources, whose shareholders include Low, as well as his son Low Yi Ngo, who is chief executive and managing director of Manhattan Resources.

 

Meanwhile, the value of the sale represents 30.61 per cent of the group' s latest audited NTA, while the net asset value of the land is 27.5 per cent of the group' s net asset value.

 

The transaction will require the approval of independent shareholders at an extraordinary general meeting. Manhattan Resources is gearing up to name an independent financial adviser, and the audit committee will consider whether the deal is on normal commercial terms and not prejudicial to the interests of the company and its minority shareholders.

MANHATTAN Resources has entered into a sale and purchase agreement with renewable energy platform Athena Energy in a bid to augment its power business.

 

The mainboard-listed coal-shipping group will purchase Athena for a consideration of S$4.8 million, with S$4.3 million to be paid in cash and the remaining S$553,700 in new ordinary shares. The shares will be priced at S$0.039 per share, representing a 4.2 per cent discount to the weighted average price of shares traded on Oct 19.

 

Athena is currently valued at between S$4 million and S$6.1 million.

 

Manhattan Resources is looking to ride the green energy trend, as disruptions in the global supply chains and Covid-19 have made significant commercial impact on the company. Even in the power business, demand for electricity has dropped due to the pandemic.

 

Looking to pursue sustainable businesses with stable income as part of its corporate strategy review, the coal-shipping group selected renewable energy as a business moving forward. Athena has checked Manhattan Resource' s investment policy and transformation objectives boxes.

 

Athena currently has 4 megawatt operating and 30 megawatt commitment in rooftop commercial and industrial solar projects in Vietnam. The company also has a pipeline of renewable energy projects in Asia and Australia which will accelerate Manhattan Resources' transformation into a renewable energy company.

 

" The acquisition of Athena will strengthen Manhattan Resources' ability to accelerate our growth in the renewable energy business and transform Manhattan Resources into a significant renewable energy player in the Asia and Australia markets. This will undoubtedly enlarge our footprint into the region, grow our low carbon energy business and deliver sustainable value for our stakeholders and communities," said Tang Kin Fei, chairman, Manhattan Resources.