Standard Chartered's Indonesian Power Company Seeks Investors Amid Bribery Probe
12 October 2017 - 6:56PM
Dow Jones News
By Ben Otto in Jakarta and Margot Patrick in London
A Standard Chartered PLC-controlled power-plant maker at the
heart of a U.S. Justice Department bribery probe is seeking new
investors as it attempts to restructure $195 million in debt and
fund a turnaround.
Maxpower Group Pte. Ltd., a gas-to-power specialist
headquartered in Indonesia, wants to raise an unspecified amount of
money to make changes to its business model and potentially expand
its operations in Myanmar, according to a marketing document for
potential investors reviewed by The Wall Street Journal. Maxpower
hired a unit of Jefferies Group LLC in Singapore for the proposed
private share placement, according to the document.
Representatives for Standard Chartered and Jefferies declined to
comment. Maxpower didn't respond to a request for comment.
The teaser document said Maxpower will seek to restructure its
debt after the fundraising, with an incoming investor having
control over the terms of a deal. Maxpower, majority-owned by
Standard Chartered, has recently struggled to service its $195
million in debt, a person with knowledge of the matter said. The
company hasn't issued financial statements for 2015 or 2016.
Standard Chartered has been seeking an exit from the business as
part of a broader effort to reduce company stakes held by its
private equity unit. The bank previously said it would close down
the private equity unit once its 80 or so investments are sold. The
share sale proposed by Maxpower now would be new equity, not a sale
of Standard Chartered's existing stake, according to the Jefferies
document.
The Journal reported last year the Justice Department is
investigating allegations of bribes being paid to win contracts and
other irregularities at Maxpower, and looking into whether Standard
Chartered is culpable for not stopping the alleged misconduct. The
investigation remains ongoing, a person with knowledge of the
matter said. Standard Chartered previously said it alerted
authorities to the matter. The Justice Department declined to
comment.
Last year, two Standard Chartered executives left Maxpower's
board and the bank. Maxpower's chief executive also stepped down
and a new CEO started in November. Another Standard Chartered
executive on the Maxpower board left the bank this year. Standard
Chartered's remaining representative on the board, Nainesh
Jaisingh, declined to comment.
The Jefferies document said Maxpower, code-named "Project
Maple," is a "unique investment opportunity to invest in a scalable
platform in the Indonesian power market." It said the turnaround
plan would involve "streamlining existing business and optimizing
the engine fleet."
The company could also tap demand for emergency power rental and
bypass intermediaries in Indonesia to sign contracts directly with
the state power company, the document said.
Last month, the U.K.'s Financial Conduct Authority summoned
Standard Chartered PLC officials to a meeting over a
whistleblower's claims of misconduct at Maxpower, the Journal
reported. The Bank of England is also in contact with the FCA about
the allegations.
Write to Ben Otto at ben.otto@wsj.com and Margot Patrick at
margot.patrick@wsj.com
(END) Dow Jones Newswires
October 12, 2017 03:41 ET (07:41 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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