Scandal-Tainted Company Backed by StanChart Seeks InvestorBy
MAXpower will restructure debt after completing share sale
Company under scrutiny in U.S. after bribery allegations
MAXpower Group Pte, the Standard Chartered Plc-backed Indonesian power company that’s under investigation over bribery allegations, has appointed Jefferies Group LLC to help prepare a share sale, according to documents reviewed by Bloomberg.
MAXpower, which defaulted on a $222 million loan in May, plans to raise money through a private placement to fund capital spending and “turn around the business,” marketing documents prepared by Jefferies show. After completing the share sale, the company would enter talks to restructure $195 million of debt, according to the documents.
The MAXpower investment has been controversial for Standard Chartered as U.S. and U.K. regulators investigate allegations that former executives at MAXpower bribed Indonesian government officials. The London-based bank, which controls MAXpower, informed authorities in the U.S., the U.K., Singapore and Indonesia in 2016 about “inappropriate payments” at the company, Chief Executive Officer Bill Winters said in November.
The Jefferies document says the “incoming investor” would have control of negotiating terms for the debt restructuring, without naming any potential buyers.
Spokesmen for Standard Chartered and Jefferies declined to comment. MAXpower CEO Syamsurizal Munaf and co-general counsel Ritankar Sahu didn’t immediately reply to e-mails and calls seeking comment.
Standard Chartered Private Equity holds a direct stake of about 5 percent in MAXpower. The bank also has an indirect holding via its management of two other shareholders: Standard Chartered IL&FS Asia Infrastructure Growth Fund, with 19.9 percent, and Marina III (Singapore) Pte, with 11.6 percent.
MAXpower, which builds and operates gas-fired power plants in Southeast Asia, defaulted in May on a $222 million loan that was arranged by Standard Chartered and Singapore’s Oversea-Chinese Banking Corp.
Standard Chartered IL&FS Asia Infrastructure Growth Fund invested $58 million in MAXpower in 2012. After the discovery of the alleged bribery in 2015, the bank took control by removing MAXpower’s founding board members and installing its own directors, including Nainesh Jaisingh, who heads Standard Chartered’s principal finance business.
MAXpower last released financial results for 2014, reporting a a loss of $75.9 million and negative cash flow of $13.3 million. In that year its auditor, PriceWaterhouseCoopers LLP, questioned MAXpower’s “ability to continue as a going concern.”