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Quantum Solar Park (Semenanjung) Green SRI Sukuk RM1 Billion - Information Memorandum

IM Insights
By IM Insights
5 years ago
Quantum Solar Park (Semenanjung) Green SRI Sukuk RM1 Billion - Information Memorandum

Amanah, Murabahah, Shariah, Shariah compliant, Sukuk, Tawarruq, Ibra’, Al-kafalah, Provision, Receivables, Reserves, Sales, Suq al-Sila’

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  1. Strictly Private & Confidential No: Quantum Solar Park (Semenanjung) Sdn Bhd (Company No. 1200950-D) INFORMATION MEMORANDUM PROPOSED ISSUE OR OFFER FOR SUBSCRIPTION OR PURCHASE OF OR INVITATION TO SUBSCRIBE FOR OR PURCHASE OF SUKUK BASED ON THE SHARIAH PRINCIPLE OF MURABAHAH (VIA A TAWARRUQ ARRANGEMENT) (“GREEN SRI SUKUK”) OF UP TO RINGGIT ONE BILLION (RM1,000,000,000.00) IN NOMINAL VALUE Principal Adviser CIMB INVESTMENT BANK BERHAD (COMPANY NO: 18417-M) Joint Lead Arrangers and Joint Lead Managers CIMB INVESTMENT BANK BERHAD (COMPANY NO: 18417-M) MAYBANK INVESTMENT BANK BERHAD (COMPANY NO: 15938-H) This Information Memorandum is dated 19 June 2017
  2. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum RESPONSIBILITY STATEMENT This Information Memorandum has been approved by the board of directors of Quantum Solar Park (Semenanjung) Sdn Bhd (Company No. 1200950-D) (“QSP Semenanjung” or the “Issuer”) and they accept full responsibility for the accuracy of the information contained in this Information Memorandum. To the best of the knowledge and belief of the Issuer, the information contained in this Information Memorandum is in accordance with the facts and does not omit anything likely to affect the import of such information. The Issuer, having made all reasonable enquiries, confirms that this Information Memorandum contains all information which is material in the context of the Sukuk based on the Shariah principles of Murabahah (via a Tawarruq arrangement) (“Green SRI Sukuk”) of up to Ringgit One Billion (RM1,000,000,000.00) in nominal value, that the information contained in this Information Memorandum is true and accurate in all respects and is not misleading, that the opinions and intentions expressed in this Information Memorandum are honestly held and that there are no other facts the omission of which would make this Information Memorandum or any of such information or the expression of any such opinions or intentions misleading. E-DISCLAIMER This Information Memorandum may be sent to you in an electronic form. Distribution of the Information Memorandum to any persons, other than the person receiving the electronic transmission from the Issuer, CIMB Investment Bank Berhad (Company No. 18417-M) (“CIMB”) as the principal adviser (“Principal Adviser”), CIMB and Maybank Investment Bank Berhad (Company No. 15938-H) (“Maybank IB”) as the joint lead arrangers and the joint lead managers (“Joint Lead Arrangers” and “Joint Lead Managers”) and their respective agents and any person retained to advise the person receiving the electronic transmission with respect thereto, is unauthorised. The person receiving the electronic transmission from the Issuer, the Principal Adviser, the Joint Lead Arrangers, the Joint Lead Managers or their respective agents is prohibited from disclosing the Information Memorandum, altering the contents of the Information Memorandum or forwarding a copy of the Information Memorandum or any portion thereof by electronic mail or otherwise to any person. By opening and accepting this electronic transmission of the Information Memorandum, the recipient agrees to the foregoing. Transmission over the internet may be subject to interruptions, transmission blackout, delayed transmission due to internet traffic, incorrect data transmission due to the public nature of the internet, data corruption, interception, unauthorised amendment, tampering, viruses or other technical, mechanical or systemic risks associated with internet transmissions. The Issuer, the Principal Adviser, the Joint Lead Arrangers, the Joint Lead Managers or their respective agents have not accepted and will not accept any responsibility and/or liability for any such interruption, transmission blackout, delayed transmission, incorrect data transmission, corruption, interception, amendment, tampering or viruses or any consequences thereof. The electronic transmission of the Information Memorandum is intended only for use by the addressee name in the email and may contain legally privileged and/or confidential information. If you are not the intended recipient of the e-mail, you are hereby notified that any dissemination, distribution or copying of the email, and any attachments thereto, is strictly prohibited. If you have received the email in error, please immediately notify by i
  3. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum reply email and permanently delete all copies of the e-mail and destroy all printouts of it. IMPORTANT NOTICE AND GENERAL STATEMENT OF DISCLAIMER This Information Memorandum may not be, in whole or in part, reproduced or used for any other purpose, or shown, given, copied to or filed with any other person including, without limitation, any government or regulatory authority except with the prior written consent of the Issuer or as required under Malaysian laws, regulations or guidelines. This Information Memorandum is being furnished on a private and confidential basis solely for the purpose of enabling investors to consider the purchase of the Green SRI Sukuk. It is a condition precedent for the Green SRI Sukuk to receive a minimum rating of AA-IS by Malaysian Rating Corporation Berhad. A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the rating agency. None of the information or data contained in this Information Memorandum has been independently verified by the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers. Accordingly, no representation, warranty or undertaking, express or implied, is given or assumed by the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers as to the authenticity, origin, validity, accuracy or completeness of such information and data or that the information or data remains unchanged in any respect after the relevant date shown in this Information Memorandum. The Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers have not accepted and will not accept any responsibility for the information and data contained in this Information Memorandum or otherwise in relation to the Green SRI Sukuk and shall not be liable for any consequences of reliance on any of the information or data in this Information Memorandum. This Information Memorandum is not and is not intended to be a prospectus. Unless otherwise specified in this Information Memorandum, the information contained in this Information Memorandum is correct as at the date hereof. No person is authorised to give any information or data or to make any representation or warranty other than as contained in this Information Memorandum and, if given or made, any such information, data, representation or warranty must not be relied upon as having been authorised by the Issuer, the Principal Adviser, the Joint Lead Arrangers, the Joint Lead Managers or any other person. This Information Memorandum has not been and will not be made to comply with the laws of any country (including its territories, all jurisdictions within that country and any possession areas subject to its jurisdiction), other than Malaysia (“Foreign Jurisdiction”), and has not been and will not be lodged, registered or approved pursuant to or under any legislation (or with or by any regulatory authorities or other relevant bodies) of any Foreign Jurisdiction and it does not constitute an issue or offer of, or an invitation to subscribe for or purchase the Green SRI Sukuk or any other securities of any kind by any party in any Foreign Jurisdiction. The distribution or possession of this Information Memorandum in or from certain Foreign Jurisdictions may be restricted or prohibited by law. Each recipient is required by the Issuer, the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers to ii
  4. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum seek appropriate professional advice regarding, and to observe, any such restriction or prohibition. Neither the Issuer, the Principal Adviser, the Joint Lead Arrangers nor the Joint Lead Managers accepts any responsibility or liability to any person in relation to the distribution or possession of this Information Memorandum in or from any Foreign Jurisdiction. By accepting delivery of this Information Memorandum, each recipient agrees to the terms upon which this Information Memorandum is provided to such recipient as set out in this Information Memorandum, and further agrees and confirms that: (a) it will keep confidential all of such information and data, (b) it is lawful for the recipient to receive this Information Memorandum and to subscribe for or purchase the Green SRI Sukuk under all jurisdictions to which the recipient is subject, (c) the recipient will comply with all the applicable laws in connection with such subscription or purchase of the Green SRI Sukuk, (d) the Issuer, the Principal Adviser, the Joint Lead Arrangers, the Joint Lead Managers and their respective directors, officers, employees, agents and professional advisers are not and will not be in breach of the laws of any jurisdiction to which the recipient is subject as a result of such subscription or purchase of the Green SRI Sukuk and they shall not have any responsibility or liability in the event that such subscription or purchase of the Green SRI Sukuk is or shall become unlawful, unenforceable, voidable or void, (e) it is aware that the Green SRI Sukuk can only be transferred or otherwise disposed of in accordance with the relevant selling restrictions and all applicable laws, (f) it has sufficient knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of subscribing for or purchasing the Green SRI Sukuk and is able and prepared to bear the economic and financial risks of investing in or holding the Green SRI Sukuk, (g) it is a person falling within Section 2(6) of the Companies Act 2016 (as amended from time to time) (“Companies Act”); and Part 1 of Schedule 6 or Section 229(1)(b), and Part 1 of Schedule 7 or Section 230(1)(b), read together with Schedule 9 or Section 257(3) of the Capital Markets and Services Act 2007 (as amended from time to time) (“CMSA”) at issuance, and Section 2(6) of the Companies Act; and Part 1 of Schedule 6 or Section 229(1)(b) read together with Schedule 9 or Section 257(3) of the CMSA thereafter. This Information Memorandum is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation by the Issuer, the Principal Adviser, the Joint Lead Arrangers or the Joint Lead Managers that any recipient of this Information Memorandum should purchase any of the Green SRI Sukuk. This Information Memorandum is not a substitute for, and should not be regarded as, an independent evaluation and analysis and does not purport to be all-inclusive. Each investor contemplating purchasing any of the Green SRI Sukuk should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer and the terms of the offering of the Green SRI Sukuk, including the merits and risks involved. Neither the distribution or delivery of this Information Memorandum nor the offering, sale, transfer, delivery or otherwise disposal of any Green SRI Sukuk shall in any circumstance imply that the information contained herein concerning the Issuer, Quantum Solar Park (Kedah) Sdn Bhd (Company No. 1201799-K), Quantum Solar Park (Melaka) Sdn Bhd (Company No. 1201801-T) and Quantum Solar Park (Terengganu) Sdn Bhd (Company No. 1201798-W) (collectively, the “Project Companies”), Quantum Solar Park Malaysia Sdn Bhd (Company No. 1177896-A) (“Shareholder”) and Scatec Solar Malaysia B.V. (Company No. 68110944) (“Equity Provider”) is correct at any time subsequent to the date hereof or the date specified in this Information Memorandum if a date is specified, or that any other information supplied in connection with the Green SRI Sukuk is correct as of iii
  5. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum any time subsequent to the date indicated in the document containing the same. Neither the Principal Adviser, the Joint Lead Arrangers, the Joint Lead Managers nor any other advisers for the Green SRI Sukuk undertake to review the financial condition or affairs of the Issuer and/or the Project Companies during the tenure of the Green SRI Sukuk or to advise any investor of the Green SRI Sukuk of any information coming to its attention. The recipient of this Information Memorandum and potential investors should review, inter alia, the most recently published documents of the Issuer and/or the Project Companies when deciding whether or not to subscribe for or purchase the Green SRI Sukuk. This Information Memorandum includes certain historical information, estimates, or reports thereon derived from sources mentioned in this Information Memorandum with respect to the economy, the business which the Issuer operates and certain other matters. Such information, estimates, or reports have been included solely for illustrative purposes. No representation or warranty is made as to the accuracy or completeness of any information, estimates and/or reports thereon derived from such sources or from other third party sources. All discrepancies (if any) in the tables included in this Information Memorandum between the listed amounts and totals thereof are due to, and certain numbers appearing in this Information Memorandum are shown, after rounding. ACKNOWLEDGMENT The Issuer hereby acknowledges and authorises CIMB and Maybank IB as the Joint Lead Arrangers and the Joint Lead Managers to distribute this Information Memorandum on a confidential basis to potential investors for the sole purpose of assisting such investors to decide whether to subscribe for or purchase any Green SRI Sukuk. At the point of issuance of the Green SRI Sukuk, the Green SRI Sukuk may only be offered, sold or transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 2(6) of the Companies Act; and Part 1 of Schedule 6 (or Section 229(1)(b)) and Part 1 of Schedule 7 (or Section 230(1)(b)), read together with Schedule 9 (or Section 257(3)) of the CMSA. STATEMENTS OF DISCLAIMER – SECURITIES COMMISSION MALAYSIA (“SC”) In accordance with the CMSA, a copy of this Information Memorandum will be deposited with the SC, who takes no responsibility for its contents. The issue, offer or invitation in relation to the Green SRI Sukuk in this Information Memorandum is subject to the fulfilment of various conditions precedent including without limitation the lodgement pursuant to the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework issued by the SC on 9 March 2015 (effective on 15 June 2015) and revised on 16 January 2017 (the “LOLA Guidelines”) and each recipient of this Information Memorandum acknowledges and agrees that the lodgement to the SC shall not be taken to indicate that the SC recommends the subscription or purchase of the Green SRI Sukuk. The lodgement with the SC pursuant to the LOLA Guidelines in relation to the Green SRI Sukuk has been made on 14 June 2017. iv
  6. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum The SC shall not be liable for any non-disclosure on the part of the Issuer and assumes no responsibility for the correctness of any statements made or opinions or reports expressed in this Information Memorandum. DOCUMENTS INCORPORATED BY REFERENCE The following documents published or issued from time to time after the date hereof shall be deemed to be incorporated in, and to form part of, this Information Memorandum: (a) the most recently published annual audited financial statements and, if published later, the most recently published interim consolidated financial statements (if any) of the Issuer and the Project Companies; and (b) all supplements or amendments to this Information Memorandum circulated by the Issuer, if any, save that any statement contained herein or in a document which is deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purpose of this Information Memorandum to the extent that a statement contained in any such subsequent document which is deemed to be incorporated by reference herein modifies or supersedes such earlier statement (whether expressly, by implication or otherwise). Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Information Memorandum. The Issuer will provide, without charge, to each person to whom a copy of this Information Memorandum has been properly delivered, upon the request of such person, a copy of any or all of the documents deemed to be incorporated herein by reference unless such documents have been modified or superseded as specified above. Requests for such documents should be directed to the Issuer. FORWARD LOOKING STATEMENTS Certain statements in this Information Memorandum are based on historical data, which may not be reflective of future results, and others are forward-looking in nature, which are subject to uncertainties and contingencies. All forward-looking statements are based on estimates and assumptions made by the Issuer, the Project Companies, the Shareholder and the Equity Provider. Although the board of directors of the Issuer, the Project Companies, the Shareholder and the Equity Provider believe that these forward-looking statements are reasonable, the statements are nevertheless subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in such forward-looking statements. In light of these and other uncertainties, the inclusion of forward-looking statements in this Information Memorandum should not be regarded as a representation or warranty by the Issuer, the Project Companies, the Shareholder, the Equity Provider, its/their advisers, the Principal Adviser, the Joint Lead Arrangers or the Joint Lead Managers that the plans and objectives of the Issuer, the Project Companies, the Shareholder and the Equity Provider will be achieved. v
  7. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum CONFIDENTIALITY To the recipient of this Information Memorandum This Information Memorandum and its contents are strictly confidential and the information herein contained is given to the recipient strictly on the basis that the recipient shall ensure the same remains confidential. Accordingly, this Information Memorandum and its contents, or any information, which is made available to the recipient in connection with any further enquiries, must be held in complete confidence. This Information Memorandum is submitted to selected persons specifically in reference to the Green SRI Sukuk and may not be reproduced or used, in whole or in part, for any purpose, nor furnished to any person other than those to whom copies have been sent by the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers. In the event that there is any contravention of this confidentiality undertaking or there is reasonable likelihood that this confidentiality undertaking may be contravened, each of the Issuer, the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers may, at its discretion, apply for any remedy available to the Issuer, the Principal Adviser, the Joint Lead Arrangers or the Joint Lead Managers (as the case maybe) whether at law or equity, including without limitation, injunctions. Each of the Issuer, the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers is entitled to fully recover from the contravening party all costs, expenses and losses incurred and/or suffered, in this regard. For the avoidance of doubt, it is hereby deemed that this confidentiality undertaking shall be imposed upon the recipient, the recipient’s professional advisers, directors, employees and any other persons who may receive this Information Memorandum (or any part of it) from the recipient. The recipient must return this Information Memorandum and all reproductions thereof whether in whole or in part and any other information in connection therewith to the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers promptly upon the Principal Adviser’s, the Joint Lead Arrangers’ or the Joint Lead Managers’ request, unless that recipient provides proof of a written undertaking satisfactory to the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers with respect to destroying these documents as soon as reasonably practicable after the said request from the Principal Adviser, the Joint Lead Arrangers and the Joint Lead Managers. INVESTORS SHOULD RELY ON THEIR OWN EVALUATION TO ASSESS THE MERITS AND RISKS OF THE INVESTMENT. EACH SERIES OF THE GREEN SRI SUKUK WILL CARRY DIFFERENT RISKS AND ALL POTENTIAL INVESTORS ARE STRONGLY ENCOURAGED TO EVALUATE EACH GREEN SRI SUKUK ON ITS OWN MERIT. IT IS RECOMMENDED THAT PROSPECTIVE INVESTORS CONSULT THEIR FINANCIAL, LEGAL AND OTHER ADVISERS BEFORE PURCHASING OR ACQUIRING OR SUBSCRIBING THE GREEN SRI SUKUK. vi
  8. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum TABLE OF CONTENTS PAGE NO. GLOSSARY OF DEFINITIONS AND ABBREVIATIONS ...................................................... 1 SECTION 1 EXECUTIVE SUMMARY ................................................................................. 14 1.1 Introduction ................................................................................................... 14 1.2 Key Parties to the Project............................................................................. 14 1.3 Project Overview .......................................................................................... 16 1.4 Key Project Documents ................................................................................ 17 1.5 Brief Summary of the Structure of the Green SRI Sukuk ........................... 20 1.6 Brief Summary of the Security Arrangement for the Green SRI Sukuk .... 22 1.7 Utilisation of Proceeds ................................................................................. 23 1.8 Eligible SRI Project ....................................................................................... 24 1.9 Green Bond ................................................................................................... 25 1.10 Rating ............................................................................................................ 25 1.11 Selling Restriction ........................................................................................ 25 SECTION 2 PRINCIPAL TERMS AND CONDITIONS ........................................................ 27 2.1 Principal Terms and Conditions .................................................................. 27 2.2 Transaction Diagram of the Green SRI Sukuk ............................................ 97 2.3 Diagram Illustrating the Flow of Monies ................................................... 100 SECTION 3 INFORMATION ON THE ISSUER................................................................. 102 3.1 Incorporation............................................................................................... 102 3.2 Principal Activities ...................................................................................... 102 3.3 Share Capital and Shareholder .................................................................. 102 3.4 Profile of Directors...................................................................................... 102 3.5 Profile of Management ............................................................................... 104 SECTION 4 INFORMATION ON THE PROJECT COMPANIES ....................................... 105 4.1 Incorporation............................................................................................... 105 4.2 Principal Activities ...................................................................................... 105 4.3 Share Capital and Shareholder .................................................................. 105 4.4 Profile of Directors...................................................................................... 105 SECTION 5 5.1 5.2 5.3 5.4 5.5 5.6 Information on the Shareholder ................................................................. 106 Incorporation............................................................................................... 106 Principal Activities ...................................................................................... 106 Share Capital ............................................................................................... 106 Shareholding Structure .............................................................................. 106 Details of the Shareholders of QSP Malaysia ........................................... 106 Profile of Directors...................................................................................... 108 SECTION 6 INFORMATION ON THE EQUITY PROVIDER ............................................. 109 6.1 Incorporation............................................................................................... 109 6.2 Principal Activities ...................................................................................... 109 6.3 Share Capital and Shareholder .................................................................. 109 6.4 Profile of Directors...................................................................................... 109 6.5 Scatec Solar ASA ........................................................................................ 110 SECTION 7 INFORMATION ON THE PROJECTS ........................................................... 112 7.1 The Projects ................................................................................................ 112 7.2 Technical Description................................................................................. 112
  9. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 7.3 7.4 7.5 7.6 Licensing Requirement .............................................................................. 115 Project Economics...................................................................................... 116 Project Structure ........................................................................................ 121 Summary of Key Project Documents ........................................................ 122 SECTION 8 INVESTMENT CONSIDERATIONS .............................................................. 194 8.1 Considerations Relating to the Green SRI Sukuk..................................... 194 8.2 Risks Relating to the Issuer ....................................................................... 196 8.3 Risks Relating to the Projects ................................................................... 197 8.4 Risks Relating to the Shareholder and the Equity Provider .................... 211 8.5 General Consideration ............................................................................... 211 SECTION 9 ECONOMY AND INDUSTRY OVERVIEW .................................................... 213 SECTION 10 OTHER INFORMATION .............................................................................. 218 10.1 Contingent Liabilities ................................................................................. 218 10.2 Material Litigation ....................................................................................... 218 10.3 Related Party Transactions ........................................................................ 218 APPENDIX 1 BASE CASE CASHFLOW PROJECTIONS AND SOURCES AND USES OF FUNDS APPENDIX 2 ASSUMPTIONS OF BASE CASE CASHFLOW PROJECTIONS APPENDIX 3 OVERVIEW OF THE KEDAH SITE APPENDIX 4 SITE PLAN OF THE KEDAH SITE APPENDIX 5 OVERVIEW OF THE MELAKA SITE APPENDIX 6 SITE PLAN OF THE MELAKA SITE APPENDIX 7 OVERVIEW OF THE TERENGGANU SITE APPENDIX 8 SITE PLAN OF THE TERENGGANU SITE APPENDIX 9 CICERO’S SECOND OPINION ON QUANTUM SOLAR PARK GREEN BONDS FRAMEWORK
  10. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum GLOSSARY OF DEFINITIONS AND ABBREVIATIONS The following definitions (in addition to the definitions contained in the body herein) shall apply throughout this Information Memorandum except where the context otherwise requires: AMAs : collectively, the Asset Management Agreements, the Asset Management Agreement (Issuer and Project Co) and the Asset Management Agreement (Issuer) and “AMA” shall where the context so requires be a reference to any one or more of them; Asset Management Agreement (Kedah) : the asset management agreement dated 26 October 2016 entered into between QSP (Kedah) and Scatec Solar ASA and novated by way of a novation agreement dated 29 May 2017 between Scatec Solar ASA, QSP (Kedah) and Scatec Solar Solutions (“Novation Agreement (Asset Management Agreement – Kedah)”) (as may be amended or supplemented from time to time); Asset Management Agreement (Melaka) : the asset management agreement dated 26 October 2016 entered into between QSP (Melaka) and Scatec Solar ASA and novated by way of a novation agreement dated 29 May 2017 between Scatec Solar ASA, QSP (Melaka) and Scatec Solar Solutions (“Novation Agreement (Asset Management Agreement – Melaka)”) (as may be amended or supplemented from time to time); Asset Management Agreement (Terengganu) : the asset management agreement dated 26 October 2016 entered into between QSP (Terengganu) and Scatec Solar ASA and novated by way of a novation agreement dated 29 May 2017 between Scatec Solar ASA, QSP (Terengganu) and Scatec Solar Solutions (“Novation Agreement (Asset Management Agreement – Terengganu)”) (as may be amended or supplemented from time to time); Asset Management Agreements : collectively, the Asset Management Agreement (Kedah), Asset Management Agreement (Melaka) and Asset Management Agreement (Terengganu), and “Asset Management Agreement” shall where the context so requires be a reference to any one or more of them; Asset Management Agreement (Issuer and QSP (Kedah)) : the asset management agreement dated 29 May 2017 entered into between QSP (Kedah) and the Issuer (as may be amended or supplemented from time to time); 1
  11. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Asset Management Agreement (Issuer and QSP (Melaka)) : the asset management agreement dated 29 May 2017 entered into between QSP (Melaka) and the Issuer (as may be amended or supplemented from time to time); Asset Management Agreement (Issuer and QSP (Terengganu)) : the asset management agreement dated 29 May 2017 entered into between QSP (Terengganu) and the Issuer (as may be amended or supplemented from time to time); Asset Management Agreements (Issuer and Project Co) : collectively, the Asset Management Agreement (Issuer and QSP (Kedah)), Asset Management Agreement (Issuer and QSP (Melaka)) and Asset Management Agreement (Issuer and QSP (Terengganu)), and “Asset Management Agreement (Issuer and Project Co)” shall where the context so requires be a reference to any one or more of them; Asset Management Agreement (Issuer) : the asset management agreement dated 26 October 2016 entered into between the Issuer and Scatec Solar ASA and novated by way of a novation agreement dated 29 May 2017 between Scatec Solar ASA, the Issuer and Scatec Solar Solutions (“Novation Agreement (Asset Management Agreement – Issuer)”) (as may be amended or supplemented from time to time); BNM : Bank Negara Malaysia; Cam-Lite : Cam-Lite Sdn Bhd (Company No. 759290-V); CIMB : CIMB Investment Bank Berhad (Company No. 18417-M); Commercial Operation Date or COD : with respect to each Plant, the date upon which each of the conditions to the “Commercial Operation Date” (as defined under the PPAs) for such Plant as set out in clause 3.3 of the relevant PPA have been satisfied; Commission : the Energy Commission Malaysia; Companies Act : the Companies Act 2016, as amended from time to time; CMSA : the Capital Markets and Services Act 2007, as amended from time to time; EGN Network : EGN Network Sdn Bhd (Company No. 632441-K); Electricity Supply Act : the Electricity Supply Act 1990, as amended from time to time; 2
  12. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Eligible SRI project : an Eligible SRI project has the meaning ascribed to it under Chapter 7, Part 3, Section B of the LOLA Guidelines, and “Eligible SRI projects” shall where the context so requires be a reference to any one or more of them; Energy Payment : a payment determined in accordance with the PPAs to be made by TNB to the Project Companies for the net electrical output generated and delivered from the Plants; Energy Rate : means (i) RM0.52 per kWh for the first twelve (12) years from the Commercial Operation Date; (ii) RM0.505 per kWh for the remainder of the Term; or such other rate as may be adjusted in accordance with the terms of the PPAs; EPC Contract (Kedah) : the engineering procurement and construction contract dated 28 February 2017 entered into between QSP (Kedah) and the EPC Contractor and supplemented by the letters dated 11 May 2017 and 22 May 2017 (“Letters (EPC Contract – Kedah)”) (as may be amended or supplemented from time to time); EPC Contract (Melaka) : the engineering procurement and construction contract dated 28 February 2017 entered into between QSP (Melaka) and the EPC Contractor and supplemented by the letters dated 11 May 2017 and 22 May 2017 (“Letters (EPC Contract – Melaka)”) (as may be amended or supplemented from time to time); EPC Contract (Terengganu) : the engineering procurement and construction contract dated 28 February 2017 entered into between QSP (Terengganu) and the EPC Contractor and supplemented by the letter dated 22 May 2017 (“Letter (EPC Contract – Terengganu)”) (as may be amended or supplemented from time to time); EPC Contracts : collectively, the EPC Contract (Kedah), EPC Contract (Melaka) and EPC (Terengganu), and “EPC Contract” shall where the context so requires be a reference to any one or more of them; 3
  13. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum EPC Contractor : Scatec Solar Solutions; Equity Contribution Agreement : the equity contribution agreement entered or to be entered into between the Shareholder, the Equity Provider, the Issuer and the Security Agent (as may be amended or supplemented from time to time), setting out, inter alia, the undertaking of each of the Shareholder and the Equity Provider to provide capital contribution to the Issuer; Equity Provider : Scatec Solar Malaysia B.V.; Facility Agent : CIMB; Financial Close : the date upon which all the conditions precedent for the issuance of the Green SRI Sukuk have been fulfilled or waived, as the case may be; Generation Licence : the licence required to be obtained by each Project Company pursuant to Section 9 of the Electricity Supply Act to enable each Project Company to own and operate the Plant and deliver and sell solar photovoltaic energy to TNB; Government : the Government of Malaysia; Green SRI Sukuk : the Green SRI Sukuk of up to Ringgit One Billion (RM1,000,000,000.00) in nominal value based on the Shariah principle of Murabahah (via a Tawarruq arrangement); Grid System : the bulk power network controlled or used by the grid system operator for the purpose of transmitting and distributing electricity to end users and that portion of the SPP Works to be transferred to TNB; Initial Operation Date : the date on which the net electrical output is first generated and delivered from the Plants to the Grid System; Insurance Adviser : Sterling Insurance Brokers Sdn Bhd (Company No. 35219-T); Interco Financing Documents : the intercompany financing documents entered or to be entered into by the Issuer with each Project Company relating to the following: (a) the advancement of the Green SRI Sukuk proceeds to each Project Company in connection with each Project; (b) the repayment of such intercompany financing in (a) above, including the amount 4
  14. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum of principal, amount of periodic profit payment and other payment obligations payable by each Project Company; and (c) Issuer any other arrangements deemed material to the ability of the Issuer to perform or comply with any of its obligations under the Transaction Documents in respect of the Green SRI Sukuk to be mutually agreed between the Principal Adviser, each Project Company and the Issuer; QSP Semenanjung; ItraMAS Tech : Itramas Technology Sdn Bhd (Company No. 497077-A); Joint Lead Arrangers : collectively, CIMB and Maybank IB; Joint Lead Managers : collectively, CIMB and Maybank IB; Kedah Enactment : the Kedah Enactment No.63 (Malay Reservations); Kedah Land : as defined in Section 7.2.1 of this Information Memorandum; kWh : kilowatt-hour; LOLA Guidelines : the Guidelines on Unlisted Capital Market Products under the Lodge and Launch Framework issued by the SC on 9 March 2015 (effective on 15 June 2015) and revised on 16 January 2017; LPD : latest practicable date, being 2 May 2017; LTAWNT : Lembaga Tabung Terengganu; Maybank IB : Maybank Investment Bank Berhad (Company No. 15938-H); Maltech : Maltech Pro Sdn Bhd (Company No. 985454-W); MARC or Rating Agency : Malaysian Rating Corporation Berhad (Company No. 364803-V); Melaka Land : as defined in Section 7.2.1 of this Information Memorandum; Meteorological Measuring Facilities : all of the facilities (which is part of the ancillary equipment and facilities of the Plants), in accordance with the requirements of and as more specifically described in the PPAs, that are 5 Amanah Warisan Negeri
  15. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum necessary in accordance with Prudent Utility Practices) to enable the Project Companies and TNB to monitor and record the meteoroligcal conditions at the Site; Minister : the Minister of Energy, Green Technology and Water; MW : Megawatt; MWac : Megawatt in alternating current; MyClear : Malaysian Electronic Clearing Corporation Sdn. Bhd. (Company No. 836743-D); NLC : the National Land Code 1965, as amended from time to time; O&M Agreement (Kedah) : the operations and maintenance agreement dated 29 May 2017 entered into between QSP (Kedah) and Scatec Solar Solutions (as may be amended or supplemented from time to time); O&M Agreement (Melaka) : the operations and maintenance agreement dated 29 May 2017 entered into between QSP (Melaka) and Scatec Solar Solutions (as may be amended or supplemented from time to time); O&M Agreement (Terengganu) : the operations and maintenance agreement dated 29 May 2017 entered into between QSP (Terengganu) and Scatec Solar Solutions (as may be amended or supplemented from time to time); O&M Agreements : collectively, the O&M Agreement (Kedah), O&M Agreement (Melaka) and O&M (Terengganu), and “O&M Agreement” shall where the context so requires be a reference to any one or more of them; O&M Contractor : Scatec Solar Solutions; PB Facility : the performance bond facility of up to Ringgit Twenty Seven Million (RM27,000,000.00), which shall include overdraft, letter of guarantee, letter of credit, trust receipt and other working capital facilities to be granted to the Issuer in connection with the Project Companies’ obligations under the PPAs; Plants : the solar photovoltaic energy generating facility with a capacity of 50MWac and ancillary equipment and facilities in Gurun (Kedah), Merchang (Terengganu) and Jasin (Melaka) 6
  16. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum respectively to be constructed in accordance with the terms and conditions of its respective PPA and EPC Contract, and “Plant” shall where the context so requires be a reference to any one or more of them; PMAs : collectively, the Project Management Agreements and the Project Management Agreement (Issuer) and “PMA” shall where the context so requires be a reference to any one or more of them; Power Purchase Agreement (Kedah) : the power purchase agreement dated 3 November 2016 entered into between QSP (Kedah) with TNB (as may be amended or supplemented from time to time); Power Purchase Agreement (Melaka) : the power purchase agreement dated 3 November 2016 entered into between QSP (Melaka) with TNB (as may be amended or supplemented from time to time); Power Purchase Agreement (Terengganu) : the power purchase agreement dated 3 November 2016 entered into between QSP (Terengganu) with TNB (as may be amended or supplemented from time to time); PPAs : the Power Purchase Agreement (Kedah), Power Purchase Agreement (Melaka) and Power Purchase Agreement (Terengganu), and “PPA” shall where the context so requires be a reference to any one or more of them; Principal Adviser : CIMB; Principal Lease Agreement (Kedah) : the principal lease agreement dated 19 June 2017 entered into between TH Mestika and the two (2) registered proprietors of the Kedah Land (as may be amended or supplemented from time to time); Principal Lease Agreement : (Terengganu) the principal lease agreement dated 13 December 2015 entered into between SGOT, LTAWNT, Solartif and EGN Network for the Terengganu Land and the supplemental agreement to the principal lease agreement to be entered into between the aforementioned parties (“Supplemental Principal Lease Agreement (Terengganu)”) (as may be amended or supplemented from time to time); Projects the development, financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of a solar photovoltaic energy : 7
  17. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum generating facility with a capacity of 50MWac and ancillary equipment and facilities in Gurun (Kedah), Merchang (Terengganu) and Jasin (Melaka) respectively (each a “Project” and collectively, “Projects”); Project Company RPS Subscription Agreement (Kedah) : the redeemable preference shares subscription agreement dated 31 May 2017 entered into between QSP (Kedah) and the Issuer (as may be amended or supplemented from time to time); Project Company RPS Subscription Agreement (Melaka) : the redeemable preference shares subscription agreement dated 31 May 2017 entered into between QSP (Melaka) and the Issuer (as may be amended or supplemented from time to time); Project Company RPS Subscription Agreement (Terengganu) : the redeemable preference shares subscription agreement dated 31 May 2017 entered into between QSP (Terengganu) and the Issuer (as may be amended or supplemented from time to time); Project Company RPS Subscription Agreements : collectively, the Project Company RPS Subscription Agreement (Kedah), Project Company RPS Subscription Agreement (Melaka) and Project Company RPS Subscription Agreement (Terengganu), and “Project Company RPS Subscription Agreement” shall where the context so requires be a reference to any one or more of them; Project Companies : collectively: (a) QSP (Kedah); (b) QSP (Melaka); and (c) QSP (Terengganu), and “Project Company” shall where the context so requires be a reference to any one or more of them; Project Company Guarantee : an unconditional and irrevocable guarantee under the principle of Al-Kafalah provided by each of the Project Companies to the Security Agent to guarantee the payment of the nominal value and the periodic profit payments of the Green SRI Sukuk in such proportion which have been advanced by the Issuer to that Project Company under the relevant Interco Financing Documents; Project Development : the project development agreement dated 23 May 8
  18. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Agreement (Kedah) 2017 entered into between QSP (Kedah) and ItraMAS Tech (as may be amended or supplemented from time to time); Project Development Agreement (Melaka) : the project development agreement dated 23 May 2017 entered into between QSP (Melaka) and ItraMAS Tech (as may be amended or supplemented from time to time); Project Development Agreement (Terengganu) : the project development agreement dated 23 May 2017 entered into between QSP (Terengganu) and ItraMAS Tech (as may be amended or supplemented from time to time); Project Development Agreements : collectively, the Project Development Agreement (Kedah), Project Development Agreement (Melaka) and Project Development Agreement (Terengganu), and “Project Development Agreement” shall where the context so requires be a reference to any one or more of them; Project Development Agreement Letters : the letters of agreement dated 23 May 2017 between the Issuer, each of the Project Companies and QSP Malaysia on the payment arrangement for the project development fees under the Project Development Agreements; Project Documents : as set out in Section 1.4 of this Information Memorandum; Project Lands : the parcels of land upon which the Projects are to be constructed and located, being the Kedah Land, Melaka Land and the Terengganu Land respectively, and “Project Land” shall where the context so requires be a reference to any one or more of them; Project Land Lease Agreement (Kedah) : the lease agreement dated 7 November 2016 entered into between QSP (Kedah) and TH Mestika for the Kedah Land which has been replaced by the amended and restated lease agreement dated 19 June 2017 entered into between the aforementioned parties (“Amended and Restated Project Land Lease Agreement (Kedah)”) (as may be amended or supplemented from time to time); Project Land Lease Agreement (Melaka) : the lease agreement dated 10 January 2017 entered into between QSP (Melaka) and Yeng Chong for Melaka Land (as may be amended or supplemented from time to time); Project Land Lease : the lease agreement dated 7 November 2016 9
  19. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Agreement (Terengganu) entered into between QSP (Terengganu), Solartif and EGN Network for the Terengganu Land (as may be amended or supplemented from time to time); Project Land Lease Agreements : collectively, the Project Land Lease Agreement (Kedah), Project Land Lease Agreement (Melaka) and Project Land Lease Agreement (Terengganu), and “Project Land Lease Agreement” shall where the context so requires be a reference to any one or more of them; Project Management Agreement (Kedah) : the project management agreement dated 23 May 2017 entered into between QSP (Kedah) and ItraMAS Tech (as may be amended or supplemented from time to time); Project Management Agreement (Melaka) : the project management agreement dated 23 May 2017 entered into between QSP (Melaka) and ItraMAS Tech (as may be amended or supplemented from time to time); Project Management Agreement (Terengganu) : the project management agreement dated 23 May 2017 entered into between QSP (Terengganu) and ItraMAS Tech (as may be amended or supplemented from time to time); Project Management Agreements : the Project Management Agreement (Kedah), Project Management Agreement (Melaka) and Project Management Agreement (Terengganu), and “Project Management Agreement” shall where the context so requires be a reference to any one or more of them; Project Management Agreement (Issuer) : the project management agreement dated 23 May 2017 entered into between the Issuer with ItraMAS Tech (as may be amended or supplemented from time to time); Prudent Utility Practices : the practices, methods and standards generally followed by the electricity supply industry in Malaysia, during the applicable period, with respect to the design, construction, testing, operation and maintenance of solar photovoltaic generating and transmission equipment of the type used by the Plants, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works, which practices, methods and standards generally conform to applicable laws, the operation and maintenance standards recommended by the Plants’ equipment suppliers and manufacturers, the operation and maintenance standards recommended by the equipment suppliers and 10
  20. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum manufacturers of the SPP Interconnection Facility, the SPP Interconnector and the SPP Works, the internationally accepted standards relating to solar photovoltaic generating facilities and the Malaysian grid code; PTC : the principal terms and conditions of the Green SRI Sukuk as set out in Section 2.1 of this Information Memorandum; QSP (Kedah) : Quantum Solar Park (Kedah) Sdn Bhd (Company No. 1201799-K); QSP Malaysia : Quantum Solar Park Malaysia Sdn Bhd (Company No. 1177896-A); QSP (Melaka) : Quantum Solar Park (Melaka) Sdn Bhd (Company No. 1201801-T); QSP (Terengganu) : Quantum Solar Park (Terengganu) Sdn Bhd (Company No. 1201798-W); QSP Semenanjung : Quantum Solar Park (Semenanjung) Sdn Bhd (Company No. 1200950-D); Qualifying BG Bank : a financial institution which has a long term debt rating at or above AAA by RAM Rating Services Berhad or MARC; RCPS : the redeemable convertible preference shares of up to 126,000,000 to be issued by the Issuer and subscribed by the Equity Provider; RCPS Subscription Agreement : the redeemable convertible preference shares subscription agreement dated 26 October 2016 entered into between the Issuer with Scatec Solar ASA and novated by way of a novation agreement between the Issuer, Scatec Solar ASA and the Equity Provider dated 17 May 2017 (as may be amended or supplemented from time to time); “RM” or “Ringgit” : Ringgit, the lawful currency of Malaysia; RPS : redeemable preference shares; RPS Subscription Agreement the redeemable preference shares subscription agreement dated 26 October 2016 entered into between the Shareholder and Scatec Solar ASA and novated by way of a novation agreement dated 17 May 2017 between the Shareholder, Scatec Solar ASA and the Equity Provider (as may be amended or supplemented from time to time); 11
  21. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum SC : Securities Commission Malaysia; Scatec Solar ASA : Scatec Solar ASA (Company No. 990918546); Scatec Solar Malaysia B.V. : Scatec Solar 68110944); Scatec Solar Solutions : Scatec Solar Solutions Malaysia (Company No. 1211560-V); Scheduled Commercial Operation Date : in relation to each Plant, 31 December 2017, or in each case (if applicable), such other date determined in accordance with the relevant PPA; Security Agent : CIMB; Security Documents : has the meaning ascribed to it in Section 1.6 of this Information Memorandum; SGOT : State Government of Terengganu; Shareholder : QSP Malaysia; Shariah Adviser : CIMB Islamic Bank Berhad (Company No. 671380H); Site : the parcels of land upon which the Projects are to be constructed and located, as more specifically described in the PPAs; Solartif : Solartif Sdn Bhd (Company No. 783663-T); Sponsors : Cam-Lite, ItraMAS Tech and Maltech; SPP Interconnection Facility : the new 132kV substation and associated facilities to be designed, constructed, owned, operated and maintained by the Project Companies as further described in the PPAs to enable the Project Companies to deliver solar photovoltaic energy from the Plants and to maintain the stability of the Grid System; SPP Works : the design, engineering, procurement, supply, manufacturing, construction, installation, erection, testing, labour, services, facilities, equipment, supplies and materials to be furnished, supplied or performed by the Project Company at the TNB Interconnection Facility and if applicable including transmission lines and loop-in loop-out (LILO) works as further described in the PPAs; Sukukholders : the holders of the Green SRI Sukuk; 12 Malaysia B.V. (Company Sdn No. Bhd
  22. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Sukuk Trustee : Pacific Trustees Berhad (Company No. 317001-A); Technical Adviser : Mott MacDonald (Malaysia) Sdn Bhd (Company No. 205031-T); Terengganu Land : as defined in Section 7.2.1 of this Information Memorandum; Term : the period of the PPA and any extension of that period as may be determined in accordance with the PPA; TH Mestika : TH Mestika Sdn Bhd (Company No. 620374-D); TNB : Tenaga Nasional Berhad (Company No. 200866W); TNB Interconnection Facility : the existing or new TNB's substation as further described in the PPA; Transaction Documents : collectively, the following:(a) the Trust Deed; (b) the Facility Agreement; (c) the Deed of Covenants (which includes the Project Company Guarantees and the provisions, inter alia, in relation to the appointment of the security agent); (d) the Islamic agreements; (e) the Securities Lodgement Form; (f) the Equity Contribution Agreement; (g) the Security Documents; and any other agreements (whenever executed) mutually agreed between the Issuer and the Principal Adviser to be designated as a “Transaction Document”. United States or U.S. : the United States of America; USD : United States Dollar(s), being the lawful currency of the United States; and Yeng Chong : Yeng Chong Realty Berhad (Company No. 43410U). 13
  23. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Section 1 Executive Summary 1.1 Introduction The Issuer proposes to issue Green SRI Sukuk of up to Ringgit One Billion (RM1,000,000,000.00) in nominal value based on the Shariah principle of Murabahah (via a Tawarruq arrangement). 1.2 Key Parties to the Project 1.2.1 The Issuer QSP Semenanjung was incorporated in Malaysia on 6 September 2016 under the Companies Act. It is a private company limited by shares with registered address at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur. 14
  24. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 1.2.2 1.2.3 The Project Companies (a) QSP (Kedah) was incorporated in Malaysia on 14 September 2016 under the Companies Act. It is a private company limited by shares with registered address at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur. (b) QSP (Melaka) was incorporated in Malaysia on 14 September 2016 under the Companies Act. It is a private company limited by shares with registered address at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur. (c) QSP (Terengganu) was incorporated in Malaysia on 14 September 2016 under the Companies Act. It is a private company limited by shares with registered address at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur. The Shareholder QSP Malaysia was incorporated in Malaysia on 2 March 2016 under the Companies Act. It is a private company limited by shares with registered address at 29A, Lorong P.S. 1, Bandar Perda, 14000 Bukit Mertajam, Bukit Mertajam. 1.2.4 The Equity Provider Scatec Solar Malaysia B.V. was incorporated in Netherlands on 16 February 2017 under the laws of Netherlands. It was incorporated as a private limited liability company with a registered address at Overschiestraat 61, 5e verdieping, 1062XD Amsterdam. [The rest of this page has been intentionally left blank] 15
  25. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 1.3 Project Overview The Sponsors were offered to undertake the Projects via the conditional letter of award dated 17 August 2016 from the Commission (“Conditional Letter of Award”). QSP Malaysia is a special purpose vehicle owned by the Sponsors to undertake the Projects on a “Build-Own-Operate” scheme. The Projects consist of three (3) solar photovoltaic plants of 50MWac each in Peninsular Malaysia, with one plant to be located in the northern town of Gurun in Kedah, one in the eastern coast town of Merchang in Terengganu and another in the southern town of Jasin in Melaka. QSP Malaysia has established a wholly owned subsidiary, QSP Semenanjung, which in turn owns the entire equity stake of each of the Project Companies. QSP Semenanjung, as the Issuer, will act as the funding vehicle to raise the financing for the Project Companies. On 3 November 2016, three (3) special purpose vehicles owned by QSP Malaysia, namely QSP (Kedah), QSP (Melaka) and QSP (Terengganu), as the Project 16
  26. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Companies, signed the PPAs with TNB whereby TNB is obliged to purchase and pay for all the solar energy output derived from the Projects up to a maximum annual allowable quantity for a period of twenty one (21) years from the Commercial Operation Date. On 10 March 2017, the Project Companies have been awarded the concession to undertake the Projects via the letters of award from the Commission (“Letters of Award”). Each of the Project Companies has entered into a lump sum fixed-price turnkey EPC Contract with the EPC Contractor. Each of the Project Companies has also entered into an O&M Agreement with the O&M Contractor for an agreed annual fee and term. The estimated cost of the Project Total Cost (as defined below) is up to Ringgit One Billion and Two Hundred and Fifty Two Million (RM1,252,000,000.00) and will be financed using a mixture of debt and equity financing. The capital structure will be as follows: (i) the Green SRI Sukuk to be issued by the Issuer to the Sukukholders and any other permitted indebtedness as set out in the PTC; and (ii) the Equity Amount (as defined in Section 7.4.2 of this Information Memorandum entitled “Projects’ Capital Structure”) to be made available by the Shareholder and/or the Equity Provider to the Issuer. The Projects will be implemented via the structure which is set out in further detail in Section 7.5 of this Information Memorandum entitled “Project Structure”. 1.4 Key Project Documents A summary of the Project Documents (including supplemental and/or novation agreements thereto) are as follows: Project Documents Contracting Parties Date of Document Power Purchase Agreement (Kedah) QSP (Kedah) and TNB 3 November 2016 Power Purchase Agreement (Melaka) QSP (Melaka) and TNB 3 November 2016 Power Purchase Agreement (Terengganu) QSP (Terengganu) and TNB 3 November 2016 QSP (Kedah) and the EPC Contractor QSP (Kedah) and the EPC Contractor 28 February 2017 (a) Power Purchase Agreements (b) EPC Contracts EPC Contract (Kedah) - Letters (EPC Contract – Kedah) 17 11 May 2017 22 May 2017
  27. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project Documents Contracting Parties Date of Document 28 February 2017 - Letters (EPC Contract – Melaka) QSP (Melaka) and the EPC Contractor QSP (Melaka) and the EPC Contractor EPC Contract (Terengganu) - Letter (EPC Contract – Terengganu) QSP (Terengganu) and the EPC Contractor QSP (Terengganu) and the EPC Contractor 28 February 2017 O&M Agreement (Kedah) QSP (Kedah) and the O&M Contractor 29 May 2017 O&M Agreement (Melaka) QSP (Melaka) and the O&M Contractor 29 May 2017 O&M Agreement (Terengganu) QSP (Terengganu) and the O&M Contractor 29 May 2017 EPC Contract (Melaka) 11 May 2017 22 May 2017 22 May 2017 (c) O&M Agreements (d) Project Land Lease Agreements Project Land Lease Agreement (Kedah) - Amended and Restated Project Land Lease Agreement (Kedah) Project Land Lease Agreement (Melaka) Project Land Lease Agreement (Terengganu) QSP (Kedah) and TH Mestika QSP (Kedah) and TH Mestika 7 November 2016 QSP (Melaka) and Yeng Chong 10 January 2017 QSP (Terengganu), Solartif and EGN Network 7 November 2016 19 June 2017 (e) Asset Management Agreements Asset Management Agreement (Kedah) - Novation Agreement (Asset Management Agreement - Kedah) QSP (Kedah) and Scatec Solar ASA QSP (Kedah), Scatec Solar ASA and Scatec Solar Solutions 26 October 2016 Asset Management Agreement (Melaka) - Novation Agreement (Asset Management Agreement - Melaka) QSP (Melaka) and Scatec Solar ASA QSP (Melaka), Scatec Solar ASA and Scatec Solar Solutions 26 October 2016 QSP (Terengganu) and Scatec Solar ASA 26 October 2016 Asset Management Agreement (Terengganu) 18 29 May 2017 29 May 2017
  28. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project Documents - Novation Agreement (Asset Management Agreement Terengganu) (f) Contracting Parties QSP (Terengganu), Scatec Solar ASA and Scatec Solar Solutions Date of Document 29 May 2017 Asset Management Agreement (Issuer) Asset Management Agreement (Issuer) - Novation Agreement (Asset Management Agreement - Issuer) QSP Semenanjung and Scatec Solar ASA QSP Semenanjung, Scatec Solar ASA and Scatec Solar Solutions 26 October 2016 29 May 2017 (g) Asset Management Agreement (Issuer and Project Co) Asset Management Agreement (Issuer and QSP (Kedah)) QSP (Kedah) and QSP Semenanjung 29 May 2017 Asset Management Agreement (Issuer and QSP (Melaka)) QSP (Melaka) and QSP Semenanjung 29 May 2017 Asset Management Agreement (Issuer and QSP (Terengganu)) QSP (Terengganu) and QSP Semenanjung 29 May 2017 (h) Project Development Agreements Project Development Agreement (Kedah) QSP (Kedah) and ItraMAS Tech 23 May 2017 Project Development Agreement (Melaka) QSP (Melaka) and ItraMAS Tech 23 May 2017 QSP (Terengganu) and ItraMAS Tech 23 May 2017 Project Development Agreement (Terengganu) (i) (j) Project Development Agreement Letters Project Development Agreement Letter Kedah QSP Semenanjung, QSP (Kedah) and QSP Malaysia 23 May 2017 Project Development Agreement Letter Melaka QSP Semenanjung, QSP (Melaka) and QSP Malaysia 23 May 2017 Project Development Agreement Letter Terengganu QSP Semenanjung, QSP (Terengganu) and QSP Malaysia 23 May 2017 Project Management Agreement (Issuer) Project Management Agreement (Issuer) QSP Semenanjung and ItraMAS Tech 19 23 May 2017
  29. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project Documents Contracting Parties Date of Document (k) Project Management Agreements Project Management Agreement (Kedah) QSP (Kedah) and ItraMAS Tech 23 May 2017 Project Management Agreement (Melaka) QSP (Melaka) and ItraMAS Tech 23 May 2017 QSP (Terengganu) and ItraMAS Tech 23 May 2017 Project Management Agreement (Terengganu) (l) Principal Lease Agreement (Terengganu) Principal Lease Agreement (Terengganu) - Supplemental Principal Lease Agreement (Terengganu) SGOT, LTAWNT, Solartif and EGN Network SGOT, LTAWNT, Solartif and EGN Network 13 December 2015 To be entered into (m) Principal Lease Agreement (Kedah) Principal Lease Agreement (Kedah) TH Mestika and two (2) registered proprietors 19 June 2017 (n) Generation Licence to be issued (o) All performance and/or maintenance bonds in respect of the Projects and all other guarantees, advance payment bonds and other forms of payment or performance security to be issued in favour of any of the Project Companies pursuant to any Project Documents. For more details on the terms of the Project Documents, please refer to Section 7.6 of this Information Memorandum entitled “Summary of Key Project Documents”. 1.5 Brief Summary of the Structure of the Green SRI Sukuk The issuance of the Green SRI Sukuk, shall be effected as follows: (1) Prior to the issuance of the Green SRI Sukuk, the Sukuk Trustee (on behalf of the investors of the Green SRI Sukuk (“Sukukholders”)), shall enter into an agency agreement (“Agency Agreement”) with QSP Semenanjung to appoint QSP Semenanjung as the agent of the Sukukholders (in such capacity, the “Agent”) to purchase and sell the Commodities (as defined in item 1 of the section entitled “Other Terms and Conditions – Identified assets”) of the PTC). The Agent shall then enter into a “Sub-Agency Agreement” to appoint the Sukuk Trustee to act as the sub-agent to purchase and sell the Commodities (in such capacity, the “Sub-Agent”). QSP Semenanjung (acting as the buyer (“Buyer”)), shall also enter into a “Sale Agency Agreement” to appoint the Sukuk Trustee to act as its agent (in such capacity, the “Sale Agent”) to sell the Commodities in the event QSP Semenanjung (acting as the Buyer) on-sells the Commodities to Bursa Malaysia Islamic Services Sdn Bhd or such other independent commodity 20
  30. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum platform (“Commodity Buyer”) once it has purchased the Commodities from the Sukukholders via the Sub-Agent. (2) Pursuant to a commodities murabahah master agreement (“Commodities Murabahah Master Agreement”), to be entered into between QSP Semenanjung (in such capacity, the “Buyer”), the Agent, the Sukuk Trustee (acting on behalf of the Sukukholders) and the Sub-Agent, QSP Semenanjung (acting as the Buyer), shall issue a purchase order (“Purchase Order") to the Agent and the Sub-Agent with an irrevocable undertaking to purchase the Commodities from the Sukukholders via the Sub-Agent at the Deferred Sale Price (as defined below). (3) Based on the Purchase Order, the Sub-Agent via the Commodity Trading Participant (“CTP”) (pursuant to a CTP purchase agreement entered into between the Sub-Agent and the CTP (“CTP Purchase Agreement”) shall purchase the Commodities on a spot basis from commodity vendor(s) in the Bursa Suq Al-Sila’ commodity market or such other independent commodity platform as may be determined by the Shariah Adviser (“Commodity Supplier”) at a purchase price equivalent to the Green SRI Sukuk proceeds (“Commodity Purchase Price”). The Commodity Purchase Price of the Commodities shall be in line with the asset pricing requirement stipulated under the LOLA Guidelines. (4) QSP Semenanjung (acting as the Issuer), shall issue Green SRI Sukuk to the Sukukholders whereby the proceeds thereof shall be used to pay the Commodity Purchase Price. The Green SRI Sukuk shall evidence amongst other things, the Sukukholders’ ownership of the Commodities and once the Commodities are sold to QSP Semenanjung (acting as the Buyer for itself), the Sukukholders’ entitlement to receive the Deferred Sale Price. (5) Upon acquiring the Commodities, the Sub-Agent shall pursuant to the undertaking under the Purchase Order, thereafter sell those Commodities to QSP Semenanjung (acting as the Buyer for itself), for a price equivalent to the Commodity Purchase Price plus the Discounted Amount (as defined below) (if applicable) and the profit margin of the relevant Green SRI Sukuk determined prior to issuance of the Green SRI Sukuk, payable on a deferred payment basis (“Deferred Sale Price”), under the commodities sale and purchase agreement (the “Sale and Purchase Agreement”). “Discounted Amount” means the difference between the nominal value of the Green SRI Sukuk and the Commodity Purchase Price in the case of Green SRI Sukuk issued at a discount. (6) Upon the purchase of the Commodities and pursuant to the Sale Agency Agreement, the Sale Agent shall, via the Commodity Trading Participant (“CTP”) (pursuant to a CTP sale agreement entered into between the Sale Agent and the CTP (“CTP Sale Agreement”)), immediately sell the Commodities to a Commodity Buyer on a spot basis for cash, for an amount equivalent to the Commodity Purchase Price. (7) The Green SRI Sukuk shall be issued with periodic profit payments (“Periodic Profit Payments”). QSP Semenanjung (acting as the Buyer) shall make Periodic Profit Payments forming part of the Deferred Sale Price, on a profit payment date to the Sukukholders during the tenure of the relevant 21
  31. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Green SRI Sukuk and the final payment on the maturity date of the relevant Green SRI Sukuk. Upon the Green SRI Sukuk maturity dates or upon the declaration of an Event of Default (as described in the section entitled “Events of defaults or enforcement events, where applicable, including recourse available to investors” in the PTC), the Issuer shall pay the Redemption Amount (as defined below) pursuant to its obligation to pay the Deferred Sale Price for the redemption of the Green SRI Sukuk. Upon full payment of all amounts due and payable under the Green SRI Sukuk, the redeemed Green SRI Sukuk shall be cancelled. “Redemption Amount” is the amount equivalent to the Deferred Sale Price determined at the issue date less the aggregate of the Periodic Profit Payment and nominal value paid (if any) less the Ibra’ (if any). (8) Each of the Project Companies shall provide an unconditional and irrevocable guarantee under the principle of Al-Kafalah to the Security Agent acting for the Sukukholders to guarantee the payment of the nominal value and the Periodic Profit Payments of the Green SRI Sukuk in such proportion which have been advanced by the Issuer to that Project Company under the relevant Interco Financing Documents. The Project Company Guarantees would be triggered upon the declaration of any of the Events of Default, whereupon a claim on all Project Company Guarantees will be made simultaneously. A diagrammatical illustration for the Green SRI Sukuk transaction is set out in Section 2.2 of this Information Memorandum entitled “Transaction Diagram of the Green SRI Sukuk”. 1.6 Brief Summary of the Security Arrangement for the Green SRI Sukuk The Green SRI Sukuk shall be secured by the following securities: (a) a first ranking assignment and charge of all of each Project Company’s and the Issuer’s rights, interests, titles and benefits under the Project Documents including all performance and/or maintenance bonds issued or to be issued to each Project Company in relation to each of the Projects and all other guarantees, advance payment bonds and other forms of payment or performance security issued in favour of the Project Company pursuant to any Project Document, and the proceeds therefrom, excluding the Generation Licences; (b) a first ranking assignment and charge over the Designated Accounts (as set out in the section entitled “Details of designated accounts, if applicable” of the PTC) (excluding the Issuer Distribution Account (as set out in the section entitled “Details of designated accounts, if applicable”) of the PTC) and the credit balances therein and a first ranking charge over the Permitted Investments (as defined in the section entitled “Permitted investments, if applicable” of the PTC); 22
  32. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (c) a first ranking debenture comprising a fixed and floating charge over all present and future assets of each Project Company and the Issuer (excluding the Issuer Distribution Account (as set out in the section entitled “Details of designated accounts, if applicable”) of the PTC) and the SPP Works to be transferred to TNB under the PPAs); (d) a first ranking assignment and charge of all insurances policies/Takaful contracts of each Project Company and/or the Issuer; (e) a first ranking assignment and charge of all of EGN Network’s and Solartif’s rights, interests, titles and benefits under the Principal Lease Agreement (Terengganu); (f) a first ranking assignment and charge of all of TH Mestika’s rights, interests, titles and benefits under the Principal Lease Agreement (Kedah); (g) a first ranking assignment and charge over all of the Issuer’s rights, interests, titles and benefits under the Interco Financing Documents; and (h) such other security as may be and to be mutually agreed between the Principal Adviser and the Issuer and the Project Companies. (collectively, the “Security Documents”). The PB Facility provider may share the security given or to be given to the Sukukholders on a pari passu basis. In such case, the security sharing arrangement and the application of proceeds received from such security will be governed by an intercreditor agreement to be entered into or acceded by, inter alia, the Issuer, the Project Companies, the Sukuk Trustee, the Security Agent and the PB Facility provider. 1.7 Utilisation of Proceeds The proceeds of the Green SRI Sukuk shall be utilised for the following Shariahcompliant purposes in connection with the Projects which shall be an Eligible SRI project:(i) pay/advance to each Project Company as intercompany advances under the Interco Financing Documents to partially fund the respective Project Company’s project development cost which include:(a) costs and expenses payable under the EPC Contracts; (b) profit payments payable under the Interco Financing Documents which amounts in aggregate are equivalent to Periodic Profit Payments under the Green SRI Sukuk payable during construction period of the Projects; (c) project development fee payable under the Project Development Agreements which includes, inter alia, (i) all fees, expenses and all other amounts in connection with the Green SRI Sukuk accrued prior to the issuance of the Green SRI Sukuk as confirmed under the confirmation provided for purposes of compliance of conditions 23
  33. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum precedent to the issuance of the Green SRI Sukuk and (ii) the Sukuk Trustee’s Reimbursement Account Deposit (as defined in the section entitled “Details of designated accounts, if applicable” of the PTC); (d) prefund of the finance service reserve account payment payable under each of the Interco Financing Documents which amount in aggregate shall be equivalent to one (1) semi-annual Periodic Profit Payment under the Green SRI Sukuk; (e) costs and expenses payable under the performance bond/security to be given or procured for the benefit of TNB in accordance with the terms of the PPA; (f) construction term management fee payable under the AMAs, project operations fee payable under the PMAs and the fees payable under the O&M Agreements, stamp duties and other development costs not covered under the Project Development Agreements, subject to an aggregate limit of up to Ringgit Fifteen Million (RM15,000,000,000.00); and (g) taxes and goods and services tax (GST) payable in relation to the Projects, (collectively, “Project Total Cost”). The amounts payable under items (c)(i) and (c)(ii) above under the project developments fees shall be deducted upfront from the proceeds of the Green SRI Sukuk on the issue date of the Green SRI Sukuk. 1.8 Eligible SRI Project The Green SRI Sukuk are to be issued under the ‘Sustainable and Responsible Investment (SRI) Sukuk’ framework as set out in the LOLA Guidelines. The Projects are deemed as Eligibile SRI projects falling under paragraph 7.04(b)(i), Chapter 7, Part 3, Section B of the LOLA Guidelines, which are projects relating to new or existing renewable energy (solar). Impact Objectives The impact objectives from the Projects are as follows: (a) to facilitate and promote sustainable and responsible investments in Malaysia which are in line with the initiative set out under the SC’s Capital Market Masterplan 2 and further promote and enhance Malaysia’s value proposition as a centre for Islamic finance and sustainable investments; (b) the Projects are expected to be the first provider of electricity from large scale solar (“LSS”) plants in Malaysia and are expected to be instrumental in helping Malaysia reach its ambition of 1GWac from LSS by 2020; and (c) the Projects are expected to contribute towards sustainable electricity supply and the reduction of carbon emission in Malaysia in line with the National Renewable Energy Policy and National Green Technology Policy of Malaysia. 24
  34. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Compliance Statement The Issuer hereby confirms that it has complied with the relevant environmental, social and governance standards or recognised best practices relating to the Projects which are Eligible SRI projects and shall ensure continuing compliance with such governance standards or recognised best practices throughout the tenure of the Green SRI Sukuk. 1.9 Green Bond The Center for International Climate and Environmental Research Oslo (“CICERO”) has provided a second opinion (“Second Opinion”) on the Issuer’s green bonds framework designed for the Projects (“Quantum Solar Park Green Bonds Framework“) and policies for considering the environmental impacts of the Projects. The aim of CICERO’s Second Opinion on the Quantum Solar Park Green Bonds Framework is to assess the Quantum Solar Park Green Bonds Framework’s ability to support the Issuer’s stated objective of promoting the transition to low-carbon and climate resilient growth. Based on the overall assessment of each Project type, the policies guiding the implementation of the Quantum Solar Park Green Bonds Framework and transparency considerations, the Quantum Solar Park Green Bonds Framework has received a ‘Dark Green’ shading by CICERO. CICERO allocates ‘Dark Green’ shading for projects and solutions that work to realise the long-term vision of a low carbon and climate resilient future. Typically, this will entail zero emission solutions and governance structures that integrate environmental concerns into all the projects’ activities. For further information, please refer to the Second Opinion on Quantum Solar Park Green Bonds Framework report dated 2 June 2017 issued by CICERO as attached in Appendix 9 of this Information Memorandum. 1.10 Rating MARC has assigned a preliminary rating of AA-IS to the Green SRI Sukuk. 1.11 Selling Restriction The Green SRI Sukuk are tradable and transferable subject to the Selling Restriction below: Selling Restrictions at Issuance The Green SRI Sukuk may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 2(6) of the Companies Act; and Part 1 of Schedule 6 or Section 229(1)(b) and Part 1 of Schedule 7 or Section 230(1)(b), read together with Schedule 9 or Section 257(3) of the CMSA. 25
  35. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Selling Restrictions after Issuance The Green SRI Sukuk may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 2(6) of the Companies Act; and Part 1 of Schedule 6 or Section 229(1)(b) read together with Schedule 9 or Section 257(3) of the CMSA. [The rest of this page has been intentionally left blank] 26
  36. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Section 2 Principal Terms and Conditions Words and expressions used and defined in this Section 2 shall, in the event of any inconsistency with the definition section of this Information Memorandum, only be applicable for this Section 2. 2.1 Principal Terms and Conditions (1) Name of facility : (2) One-time issue programme (3) Shariah principles : (for sukuk) 1. Murabahah (cost-plus sale) 2. Tawarruq (tripartite sale) (4) Facility description An Islamic medium term notes issuance of up to RM1.00 billion in nominal value under the Shariah principle of Murabahah (via Tawarruq arrangement) (“Green SRI Sukuk”), which is one of the Shariah principles and concepts approved by the Shariah Advisory Council of the SC (“SAC”). or : : An Islamic medium term notes issuance of up to RM1.00 billion in nominal value under the Shariah principle of Murabahah (via Tawarruq arrangement). One-time issue. Underlying Transaction Prior to the issuance of the Green SRI Sukuk, the Sukuk Trustee (on behalf of the investors of the Green SRI Sukuk (“Sukukholders”)), shall enter into an agency agreement (“Agency Agreement”) with QSP Semenanjung to appoint QSP Semenanjung as the agent of the Sukukholders (in such capacity, the “Agent”) to purchase and sell the Commodities (as defined in item 1 of the section entitled “Other terms and conditions – Identified Assets”). The Agent shall then enter into a “SubAgency Agreement” to appoint the Sukuk Trustee to act as the sub-agent to purchase and sell the Commodities (in such capacity, the “Sub-Agent”). QSP Semenanjung (acting as the buyer (“Buyer”)), shall also enter into a “Sale Agency Agreement” to appoint the Sukuk Trustee to act as its agent (in such capacity, the “Sale Agent”) to sell the Commodities in the event QSP Semenanjung (acting as the Buyer) on-sells the Commodities to Bursa Malaysia Islamic Services Sdn Bhd or such other independent commodity platform acceptable to the Shariah Adviser (“Commodity Buyer”) once it has purchased the Commodities from the Sukukholders via the Sub-Agent. 27
  37. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Pursuant to a commodities murabahah master agreement (“Commodities Murabahah Master Agreement”), to be entered into between QSP Semenanjung (in such capacity, the “Buyer”), the Agent, the Sukuk Trustee (acting on behalf of the Sukukholders) and the Sub-Agent, QSP Semenanjung (acting as the Buyer), shall issue a purchase order (“Purchase Order") to the Agent and the Sub-Agent with an irrevocable undertaking to purchase the Commodities from the Sukukholders via the Sub-Agent at the Deferred Sale Price (as defined below). Based on the Purchase Order, the Sub-Agent via the Commodity Trading Participant (“CTP”) (pursuant to a CTP purchase agreement entered into between the Sub-Agent and the CTP (“CTP Purchase Agreement”)) shall purchase the Commodities on a spot basis from commodity vendor(s) in the Bursa Suq Al-Sila’ commodity market or such other independent commodity platform acceptable to the Shariah Adviser (“Commodity Supplier”) at a purchase price equivalent to the Green SRI Sukuk proceeds (“Commodity Purchase Price”). The Commodity Purchase Price of the Commodities shall be in line with the asset pricing requirement stipulated under the LOLA Guidelines. QSP Semenanjung (acting as the Issuer), shall issue Green SRI Sukuk to the Sukukholders whereby the proceeds thereof shall be used to pay the Commodity Purchase Price. The Green SRI Sukuk shall evidence amongst other things, the Sukukholders’ ownership of the Commodities and once the Commodities are sold to QSP Semenanjung (acting as the Buyer for itself), the Sukukholders’ entitlement to receive the Deferred Sale Price. Upon acquiring the Commodities, the Sub-Agent shall pursuant to the undertaking under the Purchase Order, thereafter sell those Commodities to QSP Semenanjung (acting as the Buyer for itself), for a price equivalent to the Commodity Purchase Price plus the Discounted Amount (as defined below) (if applicable) and the profit margin of the relevant Green SRI Sukuk determined prior to issuance of the Green SRI Sukuk, payable on a deferred payment basis (“Deferred Sale Price”), under the commodities sale and purchase agreement (the “Sale and Purchase Agreement”). “Discounted Amount” means the difference between the nominal value of the Green SRI Sukuk and the Commodity Purchase Price in the case of Green SRI Sukuk issued at a discount. Upon the purchase of the Commodities and pursuant to the Sale Agency Agreement, the Sale Agent shall, via the Commodity Trading Participant (“CTP”) (pursuant to a CTP sale agreement entered into between the Sale Agent and the CTP) (“CTP Sale Agreement”)), immediately sell the 28
  38. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Commodities to a Commodity Buyer on a spot basis for cash, for an amount equivalent to the Commodity Purchase Price. The Green SRI Sukuk shall be issued with periodic profit payments (“Periodic Profit Payments”). QSP Semenanjung (acting as the Buyer) shall make Periodic Profit Payments forming part of the Deferred Sale Price, on a profit payment date to the Sukukholders during the tenure of the relevant Green SRI Sukuk and the final payment on the maturity date of the relevant Green SRI Sukuk. Upon the Green SRI Sukuk maturity dates or upon the declaration of an Event of Default (as described in the section entitled “Events of defaults or enforcement events, where applicable, including recourse available to investors”), the Issuer shall pay the Redemption Amount (as defined below) pursuant to its obligation to pay the Deferred Sale Price for the redemption of the Green SRI Sukuk. Upon full payment of all amounts due and payable under the Green SRI Sukuk, the redeemed Green SRI Sukuk shall be cancelled. Each of the Project Companies (as defined in item 17 of the section entitled “Other Terms and Conditions Definitions”) shall provide an unconditional and irrevocable guarantee under the principle of Al-Kafalah to the security agent acting for the Sukukholders (“Security Agent”) to guarantee the payment of the nominal value and the Periodic Profit Payments of the Green SRI Sukuk in such proportion which have been advanced by the Issuer to that Project Company under the relevant intercompany financing documents (“Interco Financing Documents”) (collectively, the “Project Company Guarantees”). The Project Company Guarantees would be triggered upon the declaration of any of the EOD, whereupon a claim on all Project Company Guarantees will be made simultaneously. (5) Currency : Ringgit. (6) Expected facility/ : programme size (for programme, to state the option to upsize) Up to RM1,000,000,000.00. (7) Tenure of programme facility/ : 18 years. (8) Clearing and : settlement platform MyClear. Option to upsize: No. 29
  39. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (9) Mode of issue : Book building, book running, placement and private placement. bought deal, direct (10) Selling restrictions : (i) Section 2(6) of the Companies Act 2016; (ii) Part I of Schedule 6 of the Capital Markets and Services Act, 2007 (CMSA); (iii) Part I of Schedule 7 of the CMSA; and (iv) Read together with Schedule 9 of CMSA. Selling Restrictions at Issuance The Green SRI Sukuk may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 2(6) of the Companies Act, 2016 (as amended from time to time); and Part I Schedule 6 or Section 229(1)(b) and Part I Schedule 7 or Section 230(1)(b) of the CMSA, read together with Schedule 9 of the CMSA, as amended from time to time. Selling Restrictions after Issuance The Green SRI Sukuk may only be offered, sold, transferred or otherwise disposed of, directly or indirectly, to persons falling within Section 2(6) of the Companies Act, 2016 (as amended from time to time); and Part I Schedule 6 or Section 229(1)(b) read together with Schedule 9 or Section 257(3) of the CMSA, as amended from time to time. (11) Tradability transferability and : (12) Details of security/ : collateral pledged, if applicable Tradable and transferable. Secured, details as follows: The Green SRI Sukuk shall be secured by the following securities: (a) a first ranking assignment and charge of all of each Project Company’s and the Issuer’s rights, interests, titles and benefits under the Project Documents (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”) including all performance and/or maintenance bonds issued or to be issued to each Project Company in relation to each of the Projects and all other guarantees, advance payment bonds and other forms of payment or performance security issued in favour of the Project Company pursuant to any Project Document, and the proceeds therefrom, excluding the SPP Licenses (as defined in the PPAs (as defined in item 17 of the section 30
  40. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum entitled “Other Definitions”)); Terms and Conditions - (b) a first ranking assignment and charge over the Designated Accounts (as set out in the section entitled “Details of designated accounts, if applicable”) (excluding the Distribution Account (as set out in the section entitled “Details of designated accounts, if applicable”)) and the credit balances therein and a first ranking charge over the Permitted Investments (as defined in the section entitled “Permitted investments, if applicable”); (c) a first ranking debenture comprising a fixed and floating charge over all present and future assets of each Project Company and the Issuer (excluding the Distribution Account (as set out in the section entitled “Details of designated accounts, if applicable”)) and the SPP Works (as defined in the PPAs) to be transferred to Tenaga Nasional Berhad (“TNB”) under the PPAs); (d) a first ranking assignment and charge of all insurance policies/Takaful contracts of each Project Company and/or the Issuer; (e) a first ranking assignment and charge of all of EGN Network Sdn Bhd’s (Company No. 632441-K) and Solartif Sdn Bhd’s (Company No. 783663-T) rights, interests, titles and benefits under the Principal Lease Agreement (Terengganu) (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”); (f) a first ranking assignment and charge of all of TH Mestika Sdn Bhd’s (Company No. 620374-D) rights, interests, titles and benefits under the Principal Lease Agreement (Kedah) (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”); (g) a first ranking assignment and charge over all of the Issuer’s rights, interests, titles and benefits under the Interco Financing Documents; and (h) such other security as may be and to be mutually agreed between the Principal Adviser and the Issuer and the Project Companies, (collectively, the “Security Documents”). The PB Facility (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”) provider may share the security given or to be given to the 31
  41. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Sukukholders on a pari passu basis. In such case, the security sharing arrangement and the application of proceeds received from such security will be governed by an intercreditor agreement to be entered into or acceded by, inter alia, the Issuer, the Project Companies, the Sukuk Trustee, the Security Agent and the PB Facility provider (“Intercreditor Agreement”). (13) Details of guarantee, : if applicable Each of the Project Companies shall provide an unconditional and irrevocable guarantee under the principle of Al-Kafalah to the Security Agent to guarantee the payment of the nominal value and the Periodic Profit Payments of the Green SRI Sukuk in such proportion which have been advanced by the Issuer to that Project Company under the relevant Interco Financing Documents. The Project Company Guarantees would be triggered upon the declaration of any of the Events of Default, whereupon a claim on all Project Company Guarantees will be made simultaneously. (14) Convertibility issuance of : (15) Exchangeability of : issuance and details of the exchangeability Non-exchangeable. (16) Call option and : details, if applicable No call option. (17) Put option and : details, if applicable No put option. (18) Positive Covenants “Relevant Party” means any one of the Issuer and Project Company (as the case may be). : Non-convertible. Each of the Relevant Party covenants that so long as the Green SRI Sukuk are outstanding, it shall: (a) obtain, maintain and comply with all government approvals and any additional governmental authorisations, consents, rights, licenses, approvals and permits as shall now or hereafter be required under applicable laws, where failure to do so has or might have a Material Adverse Effect (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”), (i) to enable each Relevant Party to lawfully enter into, and exercise its rights and perform its obligations under the 32
  42. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Transaction Documents, the Interco Financing Documents and the Project Documents; (ii) to maintain the due legality, validity, binding effect and enforceability of each Relevant Party’s obligations under the Transaction Documents, the Interco Financing Documents and the Project Documents and the priority or rights of the Sukukholders under the Transaction Documents; (iii) to enable each Relevant Party to own, operate and maintain the Project and its assets and carry on its business; (b) at all times upon request by the Sukuk Trustee execute or cause to be executed all such further documents and do all such further acts, as are reasonably necessary to give further effect to the terms and conditions of the Transaction Documents, the Interco Financing Documents and the Project Documents; (c) exercise reasonable diligence in carrying out its business and affairs in a proper and efficient manner and in accordance with sound financial and commercial standards and practices of the power industry and in accordance with its constitutional documents; (d) perform each of its obligations under each of the Project Documents, the Interco Financing Documents and the Transaction Documents to which it is a party (including but not limited to redeeming the Green SRI Sukuk on the relevant maturity dates or any other date on which the Green SRI Sukuk are due and payable) and shall, to the extent within its reasonable control, procure the other parties to the Project Documents and the Interco Financing Documents to comply with their respective obligations thereunder where failure to do so has or might have a Material Adverse Effect; (e) take out and maintain at all times such relevant insurance policies/Takaful contracts in accordance with an insurance plan to be mutually agreed between the Relevant Party and the Insurance Adviser; (f) prepare its financial statements on a basis consistently applied in accordance with the Malaysian Financial Reporting Standards and those financial statements shall give a true and fair 33
  43. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum view of its results of the operations for the period to which the financial statements are made up and shall provide against all liabilities of the Issuer; (g) maintain an accounting system and records in compliance with applicable statutory requirements and in accordance with the Malaysian Financial Reporting Standards which are adequate to record and reflect its operations and financial condition and it will permit upon reasonable request by the Sukuk Trustee or its agent and servants and any person appointed or authorised by it with prior notice and at all reasonable times to have access to and to inspect its books of accounts and records relating to its business at any office, branch or place of business of each Relevant Party and all records kept by any other persons subject to such parties executing confidentiality undertakings as prescribed by each Relevant Party (if required) and provided further that such access and disclosure does not result in any contravention of any laws, regulations or directives by each Relevant Party and would not result in each Relevant Party breaching any duty of confidentiality or confidentiality obligations; (h) open and maintain the required Designated Accounts, pay all relevant amounts into such Designated Accounts, make all payments from such Designated Accounts only as permitted under the Transaction Documents, and comply with the terms and conditions of the Transaction Documents in all matters concerning the Designated Accounts; (i) comply with all applicable laws and regulations, all environmental laws, the environmental management plan environmental licences and all the conditions set out under the confirmations issued by the Department of Environment which provide that EIA Approval (as defined under the PPA) is not required, where failure to do so has or might have a Material Adverse Effect; (j) to the extent required by applicable laws and regulations, timely file all tax returns that are required to be filed by it and pay all taxes, fees and other charges imposed on it by any relevant governmental authority (other than taxes, fees and other charges the payment of which are not yet due or which are being contested in good faith and for which adequate, segregated reserves have been established); 34
  44. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (k) preserve and maintain good and valid title to all of its assets, free and clear of any Security Interests as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”) other than the Permitted Security Interests (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”); (l) ensure that the terms in the Transaction Documents do not contain any matter which is inconsistent with the provisions of the Information Memorandum in any material respect; (m) procure that the Projects are constructed, operated and maintained in accordance with the Project Documents, good industry practice and applicable laws; (n) in relation to the Project Companies only, cause all advances, if any, made by its directors, to be subordinated to the Green SRI Sukuk and no repayment and/ or prepayment of such advance shall be made unless otherwise provided and permitted under the Transaction Documents; (o) subject to the relevant representatives complying with all reasonable Project Lands’ (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”) rules and policies, permit representatives of the Security Agent, the Sukuk Trustee and their advisers, including without limitation, the Insurance Adviser and the Technical Adviser, during business hours and upon reasonable written advance notice, to visit and inspect the Project Lands, to examine the current plans, specifications, and manuals (and all supplements thereto), technical and statistical data, accounting books, records and other data in the possession or control of the Project Companies with respect to the Projects and to make copies and abstracts therefrom as may be required in order for such parties to discharge their duties and obligations, to attend any tests conducted at the Projects under the EPC Contracts (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”) or the PPAs and to confer with its principal officers and engineers; (p) provide to the Security Agent and Sukuk Trustee a certified true copy of the SPP License (as defined in the PPAs) for each Project Company from the Suruhanjaya Tenaga prior to the Initial Operation Date (as defined in the PPAs) and ensure that all conditions therein have been complied with within 35
  45. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum the time allowed under the SPP License; (q) other than the SPP Licence (as defined in the PPAs), provide to the Sukuk Trustee and the Security Agent a certified true copy of the material licences, material permits and material approvals required for the construction and operation of each of the Projects (which includes the planning permission/development order and construction/solar installation permit); and (r) any other covenants to be mutually agreed between the Relevant Parties and the Principal Adviser. Covenants applicable to the Issuer only: The Issuer covenants that so long as the Green SRI Sukuk are outstanding, it shall: (a) prior to the date falling on the fifth (5th) anniversary of the COD (as defined in item 17 of the section entitled “Other Terms and Conditions Definitions”), procure that there shall be no change in ownership of the Issuer and the Shareholder (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”); (b) continue to directly wholly own each Project Company; (c) cause all advances, if any, made by its directors, shareholders and related corporations (other than the Project Companies) to be subordinated to the Green SRI Sukuk and no repayment and/ or prepayment of such advance shall be made unless otherwise provided and permitted under the Transaction Documents; (d) at all times maintain a Paying Agent with a specified office in Malaysia; (e) procure that the Paying Agent will notify the Sukuk Trustee in writing in the event that the Paying Agent does not receive payment from the Issuer on the due dates as required under the Transaction Documents and the terms and conditions of the Green SRI Sukuk; (f) promptly comply with all applicable provisions of the CMSA and/ or the notes, circulars, conditions or guidelines issued by SC, Bank Negara Malaysia (“BNM”) and any other relevant regulatory authorities from time to time in relation to the 36
  46. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Green SRI Sukuk; and (g) (19) Negative Covenants any other covenants to be mutually agreed between the Issuer and the Principal Adviser. Each of the Relevant Party covenants that so long as the Green SRI Sukuk are outstanding, it shall not: (a) incur or permit to exist any indebtedness for borrowed moneys including Islamic financing or enter into any derivative transactions or give any guarantee in respect of any indebtedness of any person other than (i) the Green SRI Sukuk or (ii) the Permitted Indebtedness; (b) create or attempt or permit or agree to subsist any Security Interests (other than Permitted Security Interests) over any of its property, assets, rights or undertaking, or all or any part of the assets in respect of the Project other than pursuant to the Transaction Documents, or enter into any other preferential arrangement with any person having a similar effect which is not a Permitted Security Interest; (c) sell, transfer, lease or otherwise assign, deal with or dispose of all or any part of its business or all or any part of its assets (or agree to do any of the foregoing) whether by a single transaction or by a number of transactions whether related or not, or permit a set off (other than by operation of law) or combination of accounts (in respect of its book debts) except: (i) sales of Net Electrical Output (as defined in the PPAs) pursuant to the PPAs; (ii) the transfer of the SPP Works (as defined in the PPAs) to TNB under the PPAs, where applicable; (iii) disposal of such businesses or assets due to obsolescence and/or deterioration which will not have any Material Adverse Effect; (iv) where the sale, transfer or lease is solely for the purposes of facilitating Shariah concepts used in Islamic financing facilities which constitute Permitted Indebtedness granted to the Relevant Party, is on customary terms and has no adverse consequences for the Relevant Party; or (v) as permitted under the Green SRI Sukuk 37
  47. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum and the Transaction Documents; (d) save and except for (aa) the conversion of the Designated RCPS (as defined in item 17 of the section entitled “Other Terms and Conditions Definitions”) by Scatec Solar Malaysia B.V. (the “Equity Provider”) into ordinary shares of up to forty nine percent (49%) of the total ordinary shareholding in the Issuer, (bb) the redemption or cancellation via capital reduction of the RCPS (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”) subject to Distribution Covenants (as defined in item (c) of the covenants applicable to the Issuer only below), and (cc) the redemption or cancellation via capital reduction of redeemable preference shares issued by the Project Company to the Issuer subject to the sponsors gross equity contribution (as defined in the PPAs) amounts to twenty percent (20%) or more of the total project costs (as defined in the PPAs) as at the date which is one year after the COD of the relevant Plant (as defined in item 17 of the section entitled “Other Terms and Conditions Definitions”), reduce or in any way whatsoever alter (except increase), its paid-up share capital whether by varying the amount, structure or value thereof or the rights attached thereto or by converting any of its share capital into stock, or by consolidating, dividing or sub-dividing all or any of its shares; (e) have any subsidiaries (other than the Project Companies for the Issuer); (f) except as required by applicable law, permit any amendment, supplement or variation to its constitutional documents in a manner which may be materially prejudicial to the interests of the Sukukholders; (g) unless permitted under the Transaction Documents and the Interco Financing Documents: (h) (i) provide Islamic financing/lend any money to any party; and (ii) provide or permit to exist any guarantee where the Relevant Party is a guarantor or is liable to pay for the same thereunder; enter into any transactions or agreement, other than: 38
  48. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (i) on arm’s length commercial terms in the ordinary course of business; and (ii) where such transaction or agreement would not have a Material Adverse Effect; (i) enter into any consolidation or amalgamation with, or merger with or into, or transfer all or part of its assets (unless permitted under item (c) above) to another entity or enter into any reconstruction, or winding up; (j) voluntarily enter into, commence or institute for its dissolution or for the appointment of a receiver, receiver and manager, liquidator, judicial manager or such similar officer in the Relevant Party; (k) open or maintain any bank accounts other than the Designated Accounts and the Sukuk Trustee’s Reimbursement Account (as defined in (as defined in item 10 of the section entitled “Other Terms and Conditions – Sukuk Trustee’s Reimbursement Account”) ); (l) suspend, amend, modify or vary or agree to any suspension of, or any amendment, modification or variation to, or abandon, or issue or agree to any change order or variation order being issued under, or set off, forebear or waive compliance with, any provision of any Project Document or serve any notice of breach or default or suspension under any Project Document that may result in a Material Adverse Effect; (m) grant any tenancy, licence or right to occupy or otherwise, part with title to or possession of any of the assets of each Relevant Party (other than amounts deposited in the Distribution Account); (n) agree to any adjustment to the energy rate under any PPA in the event such adjustment will result in the FSCR (Without Cash) fall below 1.15 times; In relation to item (n) above, FSCR (Without Cash) shall be computed as follows: FSCR (Without Cash) is defined as C / B where: B= the next twelve (12)-month Finance Service (as defined in the section entitled “Financial Covenant”)). 39
  49. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum C= the preceding twelve (12)-month Net Available Cash From Operations Only. “Net Available Cash From Operations Only” for the relevant FSCR Period (as defined in the section entitled “Financial Covenant”) will be calculated as: (a) all revenue received by the respective Project Companies; plus (b) any loss of revenue insurance proceeds (which includes the delay in start-up insurance and business interruption insurance) received by the respective Project Companies; plus (c) amounts received in respect of liquidated damages from the EPC Contractor and/or any other relevant counterparties (if any); less (d) all operating and maintenance expenses, ongoing capital expenses, taxes, duties, working capital requirements and liquidated damages paid by the respective Project Companies (if any); less (e) any other associated financing costs (such as agency and consultant fees). The calculation of the FSCR (Without Cash) shall be based on the Issuer’s latest audited consolidated financial statements or the latest available management accounts, whichever is later. For avoidance of doubt, any double counting in respect of the FSCR (Without Cash) and shall be disregarded. (o) any other covenants as mutually agreed between the Relevant Party and the Principal Adviser. Covenants applicable to the Issuer only: The Issuer covenants that so long as the Green SRI Sukuk are outstanding, it shall not: (a) change the utilisation of the proceeds of the Green SRI Sukuk from the purposes specified in the Transaction Documents or Information Memorandum; 40
  50. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (b) (c) enter into a transaction, whether directly or indirectly with interested persons (including a director, major shareholder, chief executive or persons connected with them) unless: (i) such transaction shall be on terms that are no less favourable to the Issuer than those which could have been obtained in a comparable transaction from persons who are not interested persons; and (ii) with respect to transactions involving an aggregate payment or value equal to or greater than RM10 million, the Issuer obtains certification from an independent adviser that the transaction is carried out on fair and reasonable terms, provided that the Issuer certifies to the Sukuk Trustee that the transaction complies with subparagraph (i) above, that the Issuer has received the certification referred to in this sub-paragraph (ii) (where applicable) and that the transaction has been approved by the majority of the board of directors or shareholders in a general meeting as the case may require; make any transfers to the Distribution Account in order to declare or pay any dividend or make any distribution whether income or capital in nature to its shareholders or redeem or cancel via capital reduction any preference shares (including the RCPS) or make any payments (whether in relation to principal, interest or otherwise) in connection with any loans or advances from its shareholders (“Restricted Payments”) unless if the Issuer certifies to the Sukuk Trustee that each of the following conditions is satisfied on such date of Restricted Payments: (i) the All Plant COD (as defined in the section entitled “Details of designated account(s), if applicable - DA” shall have been achieved; (ii) the first scheduled principal payment under the Green SRI Sukuk have been redeemed in full; (iii) no Event of Default (as described in the section entitled “Events of defaults or enforcement events, where applicable, including recourse available to investors”) or Potential Event of Default (as defined in item 17 of the section entitled “Other Terms 41
  51. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum and Conditions - Definitions”) has occurred and is continuing; (iv) the FSRA (as set out in the section entitled “Details of designated accounts, if applicable”) is fully funded in accordance with the FSRA provisions set out in the section entitled “Details of designated accounts, if applicable - FSRA”); (v) the FSCR (as set out in the section entitled “Financial Covenants”) would be at least 1.50 times if recomputed immediately after deducting such amount of Restricted Payments from the Net Available Cash (as set out in the section entitled “Financial Covenants”).The calculation of the FSCR shall be based on the Issuer’s latest annual audited consolidated financial statements or the latest available management accounts, whichever is later, (collectively, the “Distribution Covenants”); (20) Financial Covenants : (d) amend, modify or vary or agree to any amendment, modification or variation to, or set off, forebear or waive compliance with, any provision of any Interco Financing Document or serve any notice of breach or default under any Interco Financing Document; and (e) any other covenants to be mutually agreed between the Issuer and the Principal Adviser. Finance Service Coverage Ratio (“FSCR”) The Issuer shall ensure that as at each FSCR Determination Date, the FSCR shall be at least 1.25 times. FSCR is defined as A / B where: A= the preceding twelve Available Cash; and (12)-month B= the next twelve (12)-month Finance Service. Net “Net Available Cash” for the relevant FSCR Period will be calculated as: (a) all revenue received by the respective Project Companies; plus 42
  52. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (b) all cash balances in the Designated Accounts (but excluding those in the Project Co MRA (as set out in the section entitled “Details of designated accounts, if applicable” and the Distribution Account) and profit income earned at the first day of the FSCR Period; plus (c) any loss of revenue insurance proceeds (which includes the delay in start-up insurance and business interruption insurance) received by the respective Project Companies; plus (d) amounts received by the respective Project Companies in respect of liquidated damages from the EPC Contractor and/or any other relevant counterparties (if any); less (e) all operating and maintenance expenses, ongoing capital expenses, taxes, duties, working capital requirements and liquidated damages paid by the respective Project Companies (if any); less (f) any other associated financing costs (such as agency and consultant fees). For the avoidance of doubt, such amounts will also include the nominal value of any Permitted Investments. “Finance Service” for the relevant FSCR Periodwill be calculated as the sum of all Periodic Profit Payments and principal payments in relation to the Green SRI Sukuk and any Permitted Indebtedness (except in relation to subordinated shareholder financings) for the next 12 months, but excluding any associated financing costs captured in the Net Available Cash or Net Available Cash From Operations Only, as the case may be. “FSCR Determination Date” means each anniversary of the All Plant COD. The first FSCR Determination Date shall be after the first financial year end of the Issuer after All Plant COD. “FSCR Period” means the period of twelve (12) months commencing on such FSCR Determination Date. For avoidance of doubt, any double counting in respect of the FSCR and shall be disregarded. (21) Information Covenants : Each of the Relevant Party covenants that so long as the Green SRI Sukuk are outstanding, it shall: (a) as soon as the audited financial statements are 43
  53. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum available, but in any event, within one hundred and eighty (180) days after the end of each respective financial year, supply to the Sukuk Trustee copies of the financial statements of the Relevant Party in respect of such financial year audited by a firm of independent certified public auditors approved by the Sukuk Trustee; (b) as soon as the unaudited semi-annual financial statements are available, but in any event within ninety (90) days after the end of each of their respective financial half year, supply to the Sukuk Trustee copies of unaudited semi-annual financial statements for that financial half year of the Relevant Party prepared on a basis consistent with its audited financial statements and duly certified by any one of its directors; (c) deliver to the Sukuk Trustee, promptly on request, such other information which the Sukuk Trustee may reasonably require in order to discharge its duties and obligations in accordance with the Trust Deed relating to the Relevant Party’s affairs to the extent permitted by law and would not result in the Relevant Party breaching any stock exchange requirements, duty of confidentiality or confidentiality obligations; (d) promptly supply to the Sukuk Trustee of copies of any accounts (other than those provided above), reports, notice, statements or circulars issued by the Relevant Party to its shareholders. Such accounts, reports, notices, statements or circulars may be circulated by the Sukuk Trustee at its discretion to Sukukholders and the Rating Agency; (e) promptly notify the Sukuk Trustee of any change in the board of directors of the Relevant Party; (f) promptly notify the Sukuk Trustee of any litigation, arbitration or administrative proceeding as referred to in paragraphs (f) and (g) of the section entitled “Representations and Warranties”; (g) promptly notify the Security Agent in writing of any change in the authorised signatories of the Relevant Party to any of the Designated Accounts; (h) promptly notify the Security Agent and the Sukuk Trustee upon becoming aware of any Events of Default; 44
  54. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (i) when the Relevant Party delivers its audited financial statements in accordance with paragraph (a) of the section entitled “Information Covenants”, supply to the Sukuk Trustee a certificate signed by at least one (1) director certifying that: (i) since the date of the previous certificate (or, in the case of the first certificate, since the issue date of the Green SRI Sukuk), no Events of Default or enforcement under any Transaction Documents to which it is a party exists (or if such event is in existence, specifying such event and the steps, if any, being taken to remedy it); and/or (ii) the Relevant Party has observed, performed and complied with all of its covenants (including financial covenants and the details computation of such financial covenants) and other relevant obligations under the Transaction Documents; (j) provide to the Security Agent and the Sukuk Trustee as soon as possible, but in any event within ten (10) business days of receipt by the Relevant Party or the issuance by the Relevant Party of, copies of all default notices, suspension notices, force majeure notices, change in law notices and termination notices in relation to the Project Documents; (k) promptly upon the Relevant Party obtaining knowledge thereof, notify the Security Agent and the Sukuk Trustee of any breach, suspension, abandonment, termination, rescission, discharge (otherwise than by performance), supplement, novation, amendment, modification or waiver in writing of, or indulgence in writing under, any provision of any Project Documents or any variation order issued under any Project Document which may result in a Material Adverse Effect; (l) promptly upon the Relevant Party becoming aware, notify the Sukuk Trustee of: (i) any change in its withholding tax position or tax jurisdiction; (ii) any substantial change in the nature of the business of the Relevant Party; (iii) any change in the use of the proceeds 45
  55. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum arising from the Green SRI Sukuk and the details of such change in use as set out in the Transaction Documents or the Information Memorandum; (iv) any other matter that may materially prejudice the interests of the Sukukholders under the Transaction Documents; (v) any circumstances that have occurred that would materially prejudice the Relevant Party or the Security Interests created under the Security Documents or the Project Company Guarantees; (vi) any change in the name of any of the Project Companies; (vii) any cessation of liability of any of the Project Companies for the payment of the whole or part of the moneys for which they were liable under the Project Company Guarantees; (viii) the occurrence of any event that has caused or could cause, one or more of the following: (aa) any amount secured or payable under the Green SRI Sukuk to become immediately payable; (bb) the Green SRI Sukuk or the Security Interest created for the Green SRI Sukuk to become immediately enforceable; or (cc) any other right or remedy under the terms, provisions or covenants of the Green SRI Sukuk to become immediately enforceable; (m) until the COD of the relevant Plant has been achieved, provide to the Security Agent and the Sukuk Trustee, every two months a progress report; (n) provide annual reporting, via newsletters, website updates, annual report or any other communication channels, to the Sukukholders on the following: (i) the original amount earmarked for the Eligible SRI projects; 46
  56. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (o) (ii) the amount utilised for the Eligible SRI projects; (iii) the unutilised amount and where such unutilised amount is placed or invested pending utilisation; and (iv) where feasible and to the extent possible, the impact objectives from the Eligible SRI projects; and any other covenants to be mutually agreed between the Relevant Party and the Principal Adviser. Covenants applicable to the Issuer only: The Issuer covenants that so long as the Green SRI Sukuk are outstanding, it shall: (a) (b) deliver to the Security Agent and the Sukuk Trustee no later than twenty (20) business days after each FSCR Determination Date, a statement (“FSCR Statement”) which shall: (i) be prepared as of such FSCR Determination Date based on the latest annual audited financial statements and set out (A) the Net Available Cash for the FSCR Period; and (B) Finance Service (including a breakdown of such amount for each of the categories under Finance Service) for the next 12 months; (ii) set out a calculation of the FSCR as at the relevant FSCR Determination Date; (iii) be calculated in Ringgit and, to the extent that any sum denominated is in a currency other than Ringgit, its equivalent in Ringgit is to be taken into account; and (iv) be certified by at least two (2) director of the Issuer; no later than thirty (30) days prior to the expected COD of any Plant, adopt a Consolidated Annual Budget (as defined in item 17 of the section entitled “Other Terms and Conditions Definitions”) for the period commencing on the COD of that Plant and ending on 31 December of that year (the “Initial Operating Period”), and, no later than thirty (30) days prior to the beginning of 47
  57. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum each subsequent fiscal year (each, for the purposes of this sub-paragraph, an "Annual Period"), it will similarly adopt a Consolidated Annual Budget for such ensuing Annual Period, and the Issuer shall furnish copies of the proposed Consolidated Annual Budget for the Initial Operating Period and each Annual Period to the Security Agent and the Sukuk Trustee no later than the start of the Initial Operating Period and each Annual Period, as applicable. The actual variable operating costs incurred may not exceed the variable operating costs as set out in the proposed Consolidated Annual Budget by more than fifteen percent (15%) per annum; and (22) Details of designated : account(s), if applicable (c) any other covenants to be mutually agreed between the Issuer and the Principal Adviser. A. In respect of the Issuer (1) Name of account Issuer Disbursement Account (“DA”) Parties responsible for opening the account Issuer Parties responsible for maintaining/operating the account Party responsible for operating the account prior to any Event of Default: Security Agent Party responsible for operating the account upon occurrence of an Event of Default: Security Agent Signatories to the account Security Agent Sources of funds The following shall be deposited into the DA on the issue date: The balance proceeds from the Green SRI Sukuk on the issue date after (i) depositing the RM30,000 into the Sukuk Trustee’s Reimbursement Account (“Sukuk Trustee Reimbursement Account Deposit”) and (ii) deducting all fees, expenses and all other amounts in connection with the Green SRI Sukuk accrued prior to the issuance of the Green SRI Sukuk. 48
  58. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Utilisation of funds The following shall be transferred to each Project Company Capital Account (“Project Co CA”) via the intercompany advances under the Interco Financing Documents on issue date: Amount equivalent to approximately eighty percent (80%) of the Project Total Cost (as defined in item 8 of the section entitled “Other Terms and Conditions - Details on Utilisation of Proceeds”). Upon all the Plants achieving COD (being such date when the last Plant achieves COD) (“All Plant COD”), any balance (if any) shall be transferred to the CA (as defined below) and thereafter the DA will be closed. (2) Name of account Issuer Equity Account (“EA”) Parties responsible for opening the account Issuer Parties responsible for maintaining/operating the account Party responsible for operating the account prior to any Event of Default: Security Agent Party responsible for operating the account upon occurrence of an Event of Default: Security Agent Signatories to the account Security Agent Sources of funds The following shall be deposited into the EA as follows: a. Proceeds from equity injections and/or subordinated financings/advances from the Issuer’s shareholders and/or the Equity Provider (“Total Equity”) on or before the Equity Trigger Date (as defined below) except for the proceeds of the initial equity injection which has been applied for payments made under the first tranche of the project development fees referred to under the respective Project Development Agreements (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”) as confirmed under the confirmation provided for purposes of compliance of conditions 49
  59. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum precedent to the issuance of the Green SRI Sukuk (“Initial Equity Injection”). The Total Equity shall be for an amount equivalent to at least twenty percent (20%) of the Project Total Cost (“Equity Amount”). The Total Equity (except for the Initial Equity Injection) shall be backed by a bank guarantee or its equivalent procured by the Equity Provider, in form and substance satisfactory to the Security Agent issued by a Qualified BG Bank (as defined in item 17 of the section entitled “Other Terms and Conditions Definitions”)) (“Equity BG”); “Equity Trigger Date” shall mean such date when any of the Project Companies have paid ninety percent (90%) of the costs and expenses payable under the relevant EPC Contract or the balance in any of the Project Co CA falls to RM10.0 million, whichever is the earlier. For the avoidance of doubt, the entire Equity Amount shall be deposited into the EA no later than the Equity Trigger Date failing which the Equity BG will be called upon to make good the Equity Amount. b. Proceeds from equity injections and/or subordinated financings/advances from the Issuer’s shareholders and/or the Equity Provider to cover cost overrun or any other costs and expenses in respect of any of the Projects of up to RM50 million in aggregate in accordance with the Equity Contribution Agreement (“Contingency Equity”). The Contingency Equity will be backed by a bank guarantee or its equivalent in form and substance satisfactory to the Security Agent issued by a Qualifying BG Bank (“Contingency BG”); c. Additional equity and any other forms of additional shareholders’ contributions from the Issuer’s shareholders and/or the Equity Provider between the Equity Trigger Date and All Plant COD; and d. Funds drawn against the Contingency BG or the Equity BG. Utilisation of funds The proceeds in the EA shall be used to subscribe 50
  60. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum for each of the Project Companies’ redeemable preference shares pursuant to the Project Company RPS Subscription Agreement (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”) and/or ordinary shares as follows: (a) on or before the Equity Trigger Date; and (b) on any relevant date to cover cost overrun or any other costs and expenses in respect of any of the Projects (which includes any amount required to pay for any profit payments under the Interco Financing Documents up to the COD of the relevant Plant). Such proceeds shall be transferred to each Project Company Capital Account (“Project Co CA”). Upon All Plant COD, any balance (if any) shall be transferred to the CA and thereafter the EA will be closed. (3) Name of account Issuer Collection Account (“CA”) Parties responsible for opening the account Issuer Parties responsible for maintaining/operating the account Party responsible for operating the account prior to any Event of Default: Security Agent Party responsible for operating the account upon occurrence of an Event of Default: Security Agent Signatories to the account Security Agent Sources of funds The following shall be deposited into the CA: From issue date until All Plant COD (i) any transfers from Project Co CA for payment of the construction term management fees payable under the Asset Management Agreement (Issuer and Project Co) (as defined in item 17 of the section entitled “Other terms and conditions – 51
  61. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Definitions”); (ii) any transfer from the Project Co CA for profit payments received under the Interco Financing Documents from the respective Project Company during the construction of the relevant Plant. From COD of the relevant Plant (i) any transfer from the Project Co RA (as defined below) for payments received under the Interco Financing Documents from the respective Project Company after the completion of construction of the relevant Plant; (ii) payment of operating term fee from the respective Project Company under the Asset Management Agreement (Issuer and Project Co); (iii) amounts released from the FSRA in excess of the FSRA Minimum Required Balance (as defined below) after All Plant COD; (iv) any Excess Monies (as defined below) in the Project Company RA transferred at the last day of each month commencing after the COD of the relevant Plant; and (v) balance of any remaining amount from the DA and EA (if any) once All Plant COD has been achieved. Utilisation of funds All payments from the CA shall be applied in the priority of cash flow as set out below: From issue date until All Plant COD (i) for payment of Periodic Profit Payments under the Green SRI Sukuk; and (ii) transfer to the OA for payment of the construction term management fees payable under the Asset Management Agreement (Issuer) (as defined in item 17 of the section entitled “Other terms and conditions – Definitions”). 52
  62. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum After All Plant COD (4) (i) monthly transfers to the OA for payment of the Issuer’s management service fee (which includes the operating term fee under the Asset Management Agreement (Issuer) and project operations fees under the Project Management Agreement (Issuer) (as defined in item 17 of the section entitled “Other terms and conditions – Definitions”))) in accordance with the consolidated annual budget of the Issuer and the respective Project Companies setting out the monthly breakdown on payments required in accordance with the Project’s final cashflow projections (“Consolidated Annual Budget”); (ii) for payment of Periodic Profit Payments under the Green SRI Sukuk; (iii) for payment of all principal obligations under the Green SRI Sukuk; (iv) for payment of all recurring fees, expenses, commissions and all other amounts in connection with the Green SRI Sukuk; (v) transfer to the FSRA to fund the FSRA Minimum Required Balance after the Scheduled COD (as defined in item 17 of the section entitled “Other terms and conditions – Definitions”)); (vi) to the extent elected by the Issuer, payment for voluntary redemption of the Green SRI Sukuk as approved by way of extraordinary resolutions of the Sukukholders; and (vii) for payment of dividends and/or permitted distributions or payments to the Issuer’s shareholders or the Equity Provider subject to all Distribution Covenants having been met (“Distribution Amount”). The Distribution Amount shall be transferred to the Distribution Account. Name of account Issuer Finance (“FSRA”) 53 Service Reserve Account
  63. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Parties responsible for opening the account Issuer Parties responsible for maintaining/operating the account Party responsible for operating the account prior to any Event of Default: Security Agent Party responsible for operating the account upon occurrence of an Event of Default: Security Agent Signatories to the account Security Agent Sources of funds The following shall be deposited into the FSRA: (i) On Scheduled COD, the finance service reserve account payment received from each of the Project Co CA pursuant to the Interco Financing Documents which in aggregate shall be equivalent to the FSRA Minimum Required Balance; and (ii) After All Plant COD and throughout the tenure of the Green SRI Sukuk, any amounts received from the CA to fund the FSRA Minimum Required Balance. The “FSRA Minimum Required Balance” is equal to the next six (6) months’ projected finance service (consisting of principal and Periodic Profit Payment) due under the Green SRI Sukuk. The FSRA Minimum Required Balance shall be maintained at all times commencing from the Scheduled COD. In the event the credit balance in the FSRA is less than the FSRA Minimum Required Balance, the Issuer shall top up such funds from the CA within thirty (30) days from the next Periodic Profit Payments date and/or maturity date. Utilisation of funds To the extent that the funds in the CA are insufficient to pay the Periodic Profit Payments and/or principal under the Green SRI Sukuk thirty (30) days prior to the relevant Periodic Profit Payments date and/or maturity date, the Security Agent may withdraw funds from the FSRA to pay such Periodic Profit Payment and/or principal 54
  64. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum amount. After All Plant COD, if the balance in the FSRA exceeds the FSRA Minimum Required Balance, such difference between the balance in FSRA and the FSRA Minimum Required Balance (“Excess FSRA Minimum Required Balance”) may be transferred to the CA. (5) Name of account Issuer Operating Account (“OA”) Parties responsible for opening the account Issuer Parties responsible for maintaining/operating the account Party responsible for operating the account prior to any Event of Default: Issuer Party responsible for operating the account upon occurrence of an Event of Default: Security Agent Signatories to the account Signatories to the OA prior to any Event of Default: Issuer Signatories to the OA upon occurrence of anEvent of Default: Security Agent Sources of funds From issue date until All Plant COD Transfer from CA for payment of the construction term management fees payable under the Asset Management Agreement (Issuer). After All Plant COD Monthly transfer from the CA in accordance with the Consolidated Annual Budget. Utilisation of funds From issue date until All Plant COD For payment of the construction term management fees payable under the Asset Management Agreement (Issuer). 55
  65. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum After All Plant COD For payment of Issuer’s management service fee (which includes the operating term fee under the Asset Management Agreement (Issuer) and the project operations fee under the Project Management Agreement (Issuer)) in accordance with the Consolidated Annual Budget. (6) Name of account Issuer Distribution Account”) Account (“Distribution Parties responsible for opening the account Issuer Parties responsible for maintaining/operating the account Party responsible for operating the account prior to any Event of Default: Issuer Party responsible for operating the account upon occurrence of any Event of Default: Issuer Signatories to the account Issuer Sources of funds Any Distribution Amount transferred from the CA. Utilisation of funds For payment of dividend and/or permitted distribution or payment to the Issuer’s shareholders or the Equity Provider. B. In respect of each Project Company (1) Name of account Project Company Capital Account (“Project Co CA”) Parties responsible for opening the account Project Company Parties responsible for maintaining/operating the account Party responsible for operating the account prior to any Event of Default: Security Agent Party responsible for operating the account upon occurrence of an Event of Default: Security Agent 56
  66. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Signatories to the account Prior to any Event of Default: Security Agent Upon occurrence of an Event of Default: Security Agent Sources of funds The following shall be deposited into the Project Co CA: (i) any amounts received from: (a) the DA on the issue date pursuant to the intercompany advances under the Interco Financing Documents; (b) the EA pursuant to theIssuer’s subscription of each of the Project Companies’ redeemable preference shares pursuant to the Project Company RPS Subscription Agreement and/or ordinary shares as follows: (i) on or before Equity Trigger Date; and (ii) any relevant date to cover cost overrun or any other costs and expenses in respect of any of the Projects (which includes any amount required to pay for any profit payments under the Interco Financing Documents up to the COD of the relevant Plant); (ii) all revenues and receivables under the Project and the PPA including revenues and other payments received prior to the COD of the relevant Plant; (iii) proceeds of takaful/insurance claims received by the Project Company prior to the COD of the relevant Plant; and (iv) any claims received by the Project Company in respect of third party performance bonds, liquidated damages or any other compensation received prior to the COD of the relevant Plant. 57
  67. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Utilisation of funds All payments from the Project Co CA shall be applied in the priority of cash flow and based on certification from the Technical Adviser or such other acceptable professional certification or documentary evidence in form and substance acceptable to the Security Agent as set out below: (i) transfer to the Project Co OA for payment of the relevant Project Company’s Project Total Cost prior to the COD of the relevant Plant; (ii) transfer to the CA for profit payments payable under the respective Interco Financing Documents which amounts are equivalent to the relevant portion of the Periodic Profit Payments under the Green SRI Sukuk prior to the COD of the relevant Plant; (iii) transfer to the CA for the payment of the construction term management fee under the Asset Management Agreement (Issuer and Project Co); (iv) in respect of proceeds from takaful/insurance claims received by the Project Company before the COD of the Plant, transfer to the Project Co OA for the proceeds to be, inter alia, utilised to rebuild, repair or restore the affected portion of the Plant save that (i) any proceeds from third party liability and workers’ compensation insurance (if any) shall be transferred to the Project Co OA to be applied in payment of the relevant claim and (ii) any proceeds from delay in start-up insurance or business interruption insurance shall be utilised to pay similar payments required under the Interco Financing Documents and shall be transferred to the CA; (v) in respect of performance bonds/guarantees, liquidated damages or any other compensation received by the Project Company from third parties before the COD of the Plant, transfer to the Project Co OA to be applied for payment to TNB of any damages or compensation payable by the Project Company to TNB or where TNB has called on the performance bonds to make good such damages or compensation, in payment to the relevant 58
  68. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum party to the extent of the amount that has been claimed by TNB from it and the balance thereof, if any, to TNB; and (vi) transfer to the FSRA on Scheduled COD, the finance service reserve account payment for the build up of the FSRA Minimum Required Balance (“Relevant Plant FSRA Minimum Required Balance Transfer”). Upon the relevant Plant achieving COD, the remaining balances in the Project Co CA after deducting the Relevant Plant FSRA Minimum Required Balance Transfer and the amount of all invoices certified by the Technical Adviser or such other acceptable professional certification or documentary evidence in form and substance acceptable to the Security Agent but have not been paid (“Project Co CA Balance Transfer”) will be transferred to the Project Co RA and thereafter the Project Co CA will be closed. For avoidance of doubt, the Project Co CA will be closed once the Relevant Plant FSRA Minimum Required Balance Transfer or Project Co CA Balance Transfer is completed, whichever is the later. (2) Name of account Project Company Revenue Account (“Project Co RA”) Parties responsible for opening the account Project Company Parties responsible for maintaining/operating the account Party responsible for operating the Project Co RA prior to any Event of Default: Security Agent Party responsible for operating the Project Co RA upon occurrence of an Event of Default: Security Agent Signatories to the account Security Agent Sources of funds The following shall be deposited into the Project Co RA: From COD of the relevant Plant 59
  69. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (i) any transfer from the Project Co CA pursuant to Project Co CA Balance Transfer; (ii) all revenues and receivables under the Project and the PPA including revenues and other payments received; (iii) proceeds of takaful/insurance claims received by the relevant Project Company; (iv) any equity contributions from the Issuer; and (v) any claims received by the relevant Project Company in respect of third party performance bonds /guarantees, liquidated damages or any other compensation received. Utilisation of funds All payments from the Project Co RA shall be applied as set out below: From the COD of the relevant Plant (i) monthly transfers to the respective Project Co OA in accordance with the Consolidated Annual Budget for payment of operating and maintenance fees and taxes (which includes the project operations fee under the Project Management Agreements (as defined in item 17 of the section entitled “Other terms and conditions – Definitions”) (except Project Mangement Agreement (Issuer)), the operating term fee under the Asset Management Agreements and the Asset Management Agreement (Issuer and Project Co) and the fees under the O&M Agreements (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”)); (ii) transfer to the CA for payment of all obligations due under the Interco Financing Documents; (iii) transfers to the Project Co MRA in accordance with the Consolidated Annual Budget for scheduled major maintenance and/or scheduled major overhaul; (iv) in respect of proceeds from takaful/insurance claims received by the 60
  70. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project Company, transfer to the Project Co OA for the proceeds to be, inter alia, utilised to rebuild, repair or restore the affected portion of the Plant save that (A) any proceeds from third party liability and workers’ compensation insurance (if any) shall be transferred to the Project Co OA to be applied in payment of the relevant claim and (B) any proceeds from delay in start-up insurance or business interruption insurance shall be transfer to the CA to pay similar payments required under the Interco Financing Documents; (v) in respect of performance bonds/guarantees, liquidated damages or any other compensation received by the Project Company from third parties, to transfer to the Project CO OA to be applied in payment to the relevant third party of any damages or compensation payable by the Project Company to the relevant third party; and (vi) remit any Excess Monies (as defined below) in the Project Company RA at the end of each month to the CA. For the avoidance of doubt, the amount received pursuant to Project Co CA Balance Transfer shall only be applied in relation to utilisation of funds (i) above. For the further avoidance of doubt, the project operations fee under the Project Management Agreement (Issuer) will be payable from the OA subject to the Excess Monies received in the CA. Excess monies shall mean the balance in the Project Co RA at the last day of each month after meeting utilisation of funds (i) to (vi) (“Excess Monies”). (3) Name of account Project Company Operating Account (“Project Co OA”) Parties responsible for opening the account Project Company Parties responsible for maintaining/operating the account Party responsible for maintaining the account: Project Company 61
  71. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Party responsible for operating the account prior to any Event of Default: Project Company Party responsible for operating the account upon occurrence of an Event of Default: Security Agent Signatories to the account Prior to any Event of Default: Project Company Upon occurrence of an Event of Default: Security Agent Sources of funds From issue date to the COD of the relevant Plant a. Any amount received from the Project Co CA for payment of the relevant Project Company’s Project Total Cost prior to the COD of the relevant Plant; and b. Any amount received from the Project Co CA in respect of the balance proceeds from relevant takaful/insurance claims, performance bonds/guarantees, liquidated damages or any other compensation. After the COD of the relevant Plant (i) Any amount received from the Project Co RA in respect of the balance proceeds from relevant takaful/insurance claims, performance bonds/guarantees, liquidated damages or any other compensation; (ii) Any amount received from the Project Co RA on or after the COD of the relevant Plant, in accordance with the Consolidated Annual Budget for payment of operating and maintenance fees and taxes (which includes the project operations fee under the Project Management Agreements (other than the Project Management Agreement (Issuer)), the operating term fee under the Asset Management Agreements and the Asset Management Agreement (Issuer and Project Co) and the fees under the O&M Agreements). 62
  72. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Utilisation of funds From issue date to the COD of the relevant Plant a. for payment of the relevant Project Company’s Project Total Cost and taxes prior to the COD of the relevant Plant; b. in respect of proceeds from takaful/insurance claims received by the Project Company before the COD of the relevant Plant, received from the Project Co CA for the proceeds to be, inter alia, utilised to rebuild, repair or restore the affected portion of the Plant save that any proceeds from third party liability and workers’ compensation insurance (if any) shall be applied in payment of the relevant claim; c. in respect of performance bonds/guarantees, liquidated damages or any other compensation received by the Project Company from third parties before the COD of the relevant Plant, received from the Project Co CA for the proceeds to be applied for payment to TNB of any damages or compensation payable by the Project Company to TNB or where TNB has called on the performance bonds to make good such damages or compensation, in payment to the relevant party to the extent of the amount that has been claimed by TNB from it and the balance thereof, if any, to TNB. After the COD of the relevant Plant (i) For payment of operating and maintenance fees and taxes, in accordance with the Consolidated Annual Budget on or after the COD of the relevant Plant (which includes the project operations fee under the Project Management Agreements (except Project Mangement Agreement (Issuer)), the operating term fee under under Asset Management Agreements and the Asset Management Agreement (Issuer and Project Co) and the fees under the O&M Agreements); (ii) in respect of proceeds from takaful/insurance claims received by the 63
  73. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project Company from the Project Co RA for the proceeds to be, inter alia, utilised to rebuild, repair or restore the affected portion of the plant save that any proceeds from third party liability and workers’ compensation insurance (if any) shall be applied in payment of the relevant claim; and (iii) (4) in respect of performance bonds/ guarantees, liquidated damages or any other compensation received by the Project Company from third parties from the Project Co RA for the proceeds to be applied in payment to the relevant third party of any damages or compensation payable by the Project Company to the relevant third party. Name of account Project Company Maintenance Reserve Account (“Project Co MRA”) Parties responsible for opening the account Project Company Parties responsible for maintaining/operating the account Party responsible for operating the account prior to any Event of Default: Project Company Party responsible for operating the account upon occurrence of an Event of Default: Security Agent Signatories to the account Prior to any Event of Default: Project Company Upon occurrence of an Event of Default: Security Agent Sources of funds Amount transferred from the Project Co RA, in accordance with the scheduled major maintenance and/or scheduled major overhaul in accordance with the Consolidated Annual Budget after the COD of the relevant Plant. Utilisation of funds For scheduled major maintenance and/or scheduled major overhaul of the relevant Plant after the COD of the Plant. (23) Credit rating(s) of : Credit rating agency 64 : Malaysian Rating Corporation
  74. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum facility/ programme, if applicable (24) Conditions precedent Berhad. : Credit rating : AA-IS. Final / Indicative : Indicative. Amount rated : RM1,000,000,000. Conditions Precedent The Conditions Precedent for the availability of issuance of the Green SRI Sukuk all of which shall be in form and substance to the satisfaction of the Principal Adviser: A. Main Documentation (i) The Transaction Documents (other than those which are required to be executed or perfected as a condition subsequent under item 14 of the section entitled “Other terms and conditions – Conditions Subsequent”) have been signed and where applicable stamped or endorsed as being exempted from stamp duty and presented for registration with the relevant registries (where applicable); (ii) The relevant Transaction Documents shall have been presented to the relevant courts for the registration of the powers of attorney therein contained; (iii) The notices of assignment, acknowledgement of the notices of assignment and consents (where applicable) from the relevant counterparties for the Designated Accounts (other than the Distribution Account), Interco Financing Documents, EPC Contracts, O&M Agreements, AMAs (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”), PMAs (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”), Project Land Lease Agreements (as defined in item 17 of the section entitled “Other Terms and Conditions Definitions”), Principal Lease Agreement (Terengganu), Principal Lease Agreement (Kedah), PPAs, insurance policies/takaful, performance and/or maintenance bonds and the Project Development Agreements (together with the Project Development Agreement Letters) shall have been made or received as the case may be; (iv) Receipt from the Relevant Parties, certified true copies of all the executed and where applicable, stamped Interco Financing Documents and Project Documents and any other supplemental 65
  75. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum documentation in relation thereto; (v) Certified true copies of all the relevant insurance policies/Takaful contracts during the construction period; (vi) Receipt of the Equity BG and Contingency BG. B. The Relevant Parties and security providers (i) Certified true copies of the constitutional documents and the latest forms as prescribed under sections 78 (Return of allotment), 46 (Registered office and office hours) and 58 (Duty to notify of particulars and changes of director, manager and secretary) of the Companies Act 2016 of the Relevant Parties and the other security providers; (ii) A certified true copy of a board resolution of the Relevant Parties and the other security provider authorising, among others, the execution of the relevant Transaction Documents; (iii) A list of the Relevant Parties’ and the other security providers’ authorised signatories and their respective specimen signatures; (iv) A report of the relevant company search on each of the Relevant Parties and the other security providers with the Companies Commission of Malaysia (“CCM”); (v) A report of the relevant winding up search or the relevant statutory declaration of the Relevant Parties and the other security providers which revealed that none of the Relevant Party and the other security providers has been wound up; and (vi) (a) Confirmation of the amount of the payments made under the first tranche of the project development fees referred to under the Project Development Agreements as at the date of such confirmation together with invoices or other supporting documents for such payments made thereunder and (b) pursuant to such payments, receipt of documentary evidence that such amounts have been capitalised by the Project Company and deemed as the Issuer’s equity contribution to the Project Company under the Project Company RPS Subscription Agreement. 66
  76. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum C. General (i) Evidence that the lodgement of the documents and information relating to the Green SRI Sukuk in accordance with the LOLA Guidelines has been made and receipt of a copy of any other regulatory approvals which are required to be obtained in respect of the issuance of the Green SRI Sukuk; (ii) The Green SRI Sukuk shall have received a minimum rating of AA- or equivalent from the Rating Agency; (iii) Evidence that all the Designated Accounts and the Sukuk Trustee’s Reimbursement Account have been opened in accordance with the Transaction Documents; (iv) Evidence that the prescribed forms (as prescribed under the Companies Act 2016), where applicable, in respect of the charges created pursuant to the relevant Security Documents (other than those which are required to be executed or perfected as a condition subsequent under item 14 of the section entitled “Other terms and conditions – Conditions Subsequent”) (for the purpose of registration of such charges with the CCM in accordance with the Companies Act 2016) have been duly lodged with the CCM and that immediately prior to the lodgement of such prescribed forms (as prescribed under the Companies Act 2016), a search conducted on the company in respect of which each of the prescribed form is filed; (v) The Principal Adviser has received a satisfactory legal opinion from the Issuer’s solicitors addressed to them and the Sukuk Trustee advising with respect to, among others, the legality, validity and enforceability of the Interco Financing Documents and the Project Documents (excluding the SPP Licence (as defined in the PPAs)) and confirming to the Principal Adviser that all the conditions precedent in relation to the Interco Financing Documents and the Project Documents (if applicable) have been fulfilled or waived; (vi) The Principal Adviser has received a certified true copy of the written confirmation, exemption or waiver indicating that the relevant State Authority (as defined under the National Land Code 1965) or the relevant state executive council is agreeable that each Project Land in Gurun, Kedah and Jasin, Melaka may be used for purposes of the 67
  77. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum respective Project; (vii) The Principal Adviser has received land search results indicating that private caveats have been lodged by QSP (Kedah) and QSP (Melaka)against its respective Project Lands pending the registration of the lease/sub-lease with the appropriate authority; (viii) The Principal Adviser has received a satisfactory legal opinion from their legal counsel addressed to them and the Sukuk Trustee advising with respect to, among others, the legality, validity and enforceability of the Transaction Documents, and a confirmation from the legal counsel addressed to the Principal Adviser confirming that all the conditions precedent in relation to the Transaction Documents have been fulfilled or otherwise waived by the Principal Adviser; (ix) A final due diligence report from the Technical Adviser in form and substance reasonably satisfactory to the Principal Adviser; (x) A final due diligence report from the Insurance Adviser in form and substance reasonably satisfactory to the Principal Adviser; (xi) Delivery of a base case financial model by the Issuer; (xii) Evidence of the confirmation from the Shariah Adviser that the structure and mechanism together with the Transaction Documents of the Green SRI Sukuk are in compliance with Shariah principles; (xiii) Delivery of a report on cash flow projections and a comfort letter in relation to the Information Memorandum from a reporting accountant both of which are satisfactory to the Principal Adviser; (xiv) All transaction fees, costs and expenses have been fully paid or documentary evidence that it will be paid from the issuance proceeds; (xv) The Principal Adviser has received a satisfactory legal opinion from the Issuer’s solicitors addressed to them and the Sukuk Trustee advising with respect to, among others, the legality, validity and enforceability of the RPS Subscription Agreement (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”), the RCPS Subscription Agreement (as defined in item 17 of the section entitled “Other Terms and Conditions 68
  78. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Definitions”) (which includes approval from BNM as required for such subscription has been obtained) and the Project Company RPS Subscription Agreement and confirming to the Principal Adviser that all the conditions precedent in relation to the Project Company RPS Subscription Agreements, the RPS Subscription Agreement and the RCPS Subscription Agreement have been fulfilled or waived; (xvi) The Principal Adviser has received a Dutch law legal opinion with respect to the Equity Provider’s authority and capacity to enter into the Equity Contribution Agreement; (xvii) The Principal Adviser has received from the Issuer’s solicitors the receipt of presentation for registration of lease under each of the Principal Lease Agreement (Kedah), the Project Land Lease Agreement (Melaka) and (bb) the sub-lease under the Project Land Lease Agreement (Kedah); and (xviii) Such other conditions precedent as may be mutually agreed between the Issuer and the Principal Adviser. (25) Representations and : warranties Representations and warranties by each of the Relevant Party are to include inter alia, the following: (a) the Relevant Party is a company with limited liability duly incorporated and validly existing under the laws of Malaysia, has full power, authority and legal right to own its assets and to carry out the Project; (b) the Relevant Party has full power, authority and legal rights, and all necessary corporate actions and all relevant consents and approvals of any administrative, governmental or other authority or body in Malaysia have been or will be taken in order to authorise it, to enter into and to exercise its rights and perform its obligations under the Interco Financing Documents, the Transaction Documents and the Project Documents; (c) the Green SRI Sukuk, the Transaction Documents, the Project Documents and the Interco Financing Documents to which the Relevant Party is or is to be a party constitute, or when executed will constitute, legal, valid, binding and subject to the general legal qualifications (where applicable) and enforceable obligations of the Relevant Party; (d) the entry into the Transaction Documents, the 69
  79. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project Documents and the Interco Financing Documents to which the Relevant Party is a party or is to be a party and/or the performance by the Relevant Party of any of its obligations and/or the exercise by the Relevant Party of any of its rights under any such Transaction Documents, the Project Documents and the Interco Financing Documents will not: (e) (i) conflict with any applicable laws by which the Relevant Party or its assets are bound or affected; (ii) conflict with the constitutional documents of the Relevant Party; (iii) conflict with any other Transaction Document, Project Document and Interco Financing Document or any other agreement which is binding upon the Relevant Party or any asset of the Relevant Party; (iv) violate any government approval or any other governmental authorisation or any judgment applicable to the Relevant Party or the Project; (v) result in or create any Security Interests (other than the Permitted Security Interests) or any restriction of any nature on any of the assets of the Relevant Party; or (vi) cause any limitation on the Relevant Party or the powers of its directors, whether imposed by or contained in its constitutional documents or in applicable laws or otherwise to be exceeded; no registration, recording, filing or notarisation of the Transaction Documents, the Interco Financing Documents and the Project Documents and no payment of any duty or tax and no other action whatsoever is necessary to ensure the legality, validity, binding effect or enforceability in Malaysia of the liabilities and obligations of the Relevant Party, or the rights of inter alia, the Sukukholders under the Transaction Documents, the Project Documents and the Interco Financing Documents in accordance with their terms, save and except for (i) the registration of the Security Interests created or to be created under the Security Documents with the CCM, where applicable, (ii) the registration of the power of attorney contained in any of the 70
  80. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Transaction Documents, Interco Financing Documents and the Project Documents with the High Court of Malaya; (iii) the registration of the charge over the lease/sub-lease of the Project Lands, where applicable, with the relevant land office and (iv) the payment of stamp duty on the relevant Transaction Documents, Interco Financing Documents and the Project Documents; (f) no litigation, arbitration or administrative proceeding or claim or lawsuits by a governmental agency or body or other regulatory authority is presently in progress or pending or, to the best of the knowledge, information and belief of the Relevant Party, instituted against the Relevant Party, or any of its assets; (g) no step has been taken by or against the Relevant Party nor has any legal proceeding including a winding-up proceeding been commenced, instituted for the dissolution or for the appointment of a receiver, receiver and manager, liquidator, judicial manager or such similar officer of the Relevant Party, or its assets which in the case of any proceeding undertaken by a person other than the Relevant Party, has not been discharged, suspended or set aside within sixty (60) days of such action coming into the knowledge of the Relevant Party; (h) no Event of Default or Potential Event of Default has occurred or would result from the issuance of the Green SRI Sukuk or the performance of any transaction contemplated by any Transaction Document, Interco Financing Document and Project Document; (i) the Relevant Party has, to the extent required by applicable laws and regulation, timely filed all tax returns that are required to be filed by it and has paid all taxes, fees and other charges imposed on it by any relevant governmental authority (other than taxes, fees and other charges the payment of which are not yet due or which are being contested in good faith and for which adequate, segregated reserves have been established); (j) the Relevant Party’s latest audited and unaudited financial statements (if any) (including cashflow statements, income statement and the balance sheet) (i) have been prepared in accordance with the Malaysian Financial Reporting Standards and give a true and fair view of the results of operation and financial position of the Relevant Party as at 71
  81. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum the end of, and the results of its operations for, the financial period to which they relate (and in particular disclose all of its liabilities (actual or contingent)) and (ii) there has been no material adverse change in the financial condition of the Relevant Party since the date of its incorporation (where no audited financial statements have been prepared) or since its last audited financial statements; (k) no Security Interest exists over all or any part of the Project or the assets of the Relevant Party which are not a Permitted Security Interest; (l) the Relevant Party is in compliance and will comply with all applicable laws, guidelines, permits and regulations, including but not limited to all relevant environmental laws, permits and guidelines in all respects; (m) no person has repudiated or disclaimed liability under any of the Project Documents or evidenced an intention to do so; (n) no force majeure events (as defined in or contemplated by any Project Document), to the best of the Relevant Party’s knowledge, has occurred and is continuing for the purposes of that Project Document; (o) the Relevant Party’s payment obligations under the Transaction Documents (including the Green SRI Sukuk) and the Interco Financing Documents rank pari passu in all respects amongst themselves and at least pari passu with the claims of all its unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law generally; (p) any copies of any Project Documents which the Relevant Party delivered to the Security Agent/Sukuk Trustee are true and complete copies thereof; (q) there is no other agreement in connection with, or arrangements which amend, supplement or affect any Project Document; (r) there is no dispute in connection with any Project Document; (s) no step has been taken by the Shareholder or any of the Relevant Party or any other person on its/their behalf, or to the best of its knowledge, by 72
  82. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum its creditors, to commence or threaten any legal proceedings or applications under Section 366 of the Companies Act 2016 against the Relevant Party; (t) (i) all insurance policies/takaful contracts which are required to be maintained or effected by it pursuant to the Transaction Documents and the Project Documents are in full force and effect, all premium due and payable have been paid and, to the best of the knowledge and belief of the Relevant Party, no event or circumstance has occurred, nor has there been any omission to disclose a fact, which would in either case has made or could make any such insurances/takaful contracts void or voidable or entitle any insurer to avoid or otherwise reduce its liability under such insurance policies/takaful contracts and reinsurances policie/retakaful contracts; and (ii) there are no insurances/takaful arranged, procured or maintained by the Relevant Party that are not disclosed to the Security Agent and the Sukuk Trustee; (u) the Information Memorandum and any information in whatever form, document, statement or instrument furnished or to be furnished by the Relevant Party in connection thereto are true in all respects and do not contain any statements or information that are false or misleading in any respect and there is no material omission in respect thereof, and all or any projections or expressions of expectations, intentions, belief and opinion contained therein were honestly made on reasonable grounds after due and careful inquiry by the Relevant Party. For the purposes of this sub-paragraph, the Information Memorandum shall include any amendment, modification or update thereto or reissuance thereof; provided that any such amendment, modification, update or reissuance shall not remedy or waive and shall be without prejudice to, any misrepresentation under this sub-paragraph in respect of the Information Memorandum issued prior to such date. The representations and warranties shall be made on the date of the Transaction Documents and repeated on the date of the issue request, the issue date of the Green SRI Sukuk, and the date of any subscription agreement, by reference to the then existing circumstances. (26) Events of defaults or : enforcement events, where applicable, including recourse An “Event of Default” shall refer to any of following: (a) the Issuer does not pay any amount of principal or any Periodic Profit Payments payable by it under a 73
  83. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum available to investors Transaction Document when due unless such failure to pay is remedied within five (5) business days from its due date; (b) the Issuer fails to observe or perform its obligations (other than the payment obligations specified under sub-paragraph (a) above) including without limitation any of the financial covenants contained in the Transaction Documents or there is a breach by the Issuer of any term or condition under any of the Transaction Documents or the Interco Financing Documents or under any undertaking or arrangement entered into in connection therewith and, in the case of a failure or breach which in the opinion of the Sukuk Trustee is capable of being remedied, the Issuer does not remedy the failure or breach within thirty (30) days after the Issuer became aware or has been notified by the Security Agent or the Sukuk Trustee of the failure or breach; (c) any indebtedness for borrowed moneys (other than the Green SRI Sukuk) of the Issuer becomes due or payable or capable of being declared due and payable prior to its stated maturity, or any security created to secure such indebtedness becomes enforceable or any guarantee or similar obligations of the Issuer is not discharged at maturity or when called or the Issuer goes into default under, or commits a breach of, any agreement or instrument relating to any such indebtedness, guarantee or other obligations; (d) any Project Company fails to observe or perform any of its obligations under any of the Transaction Documents or the Interco Financing Documents (other than the payment obligations under the Interco Financing Documents specified under subparagraph (o) below) or under any undertaking or arrangement entered into in writing in connection therewith, and in the case of a failure which in the opinion of the Sukuk Trustee is capable of being remedied, the relevant Project Company does not remedy the failure within the period ending on the date falling thirty (30) days prior to the end of any cure or remedy period relating to such failure expressly provided for under the relevant Interco Financing Documents or the Transaction Document; (e) (i) any of the Project Documents or the Interco Financing Documents is terminated; (ii) any party to a Project Document does not comply with any provision of that agreement and such breach which 74
  84. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum is in the reasonable opinion of the Sukuk Trustee is capable of remedy, is not cured, waived or otherwise remedied within the applicable cure period set forth in such agreement; (f) any Relevant Party changes or threatens to change the nature or scope of its business, or suspends or threatens to suspend or ceases or threatens to cease on the operation of its business which it now conducts directly or indirectly; (g) it is or becomes unlawful for any person (other than the Sukuk Trustee on behalf of the Sukukholders) to perform any of its obligations under the Project Documents, the Transaction Documents or the Interco Financing Documents and, such circumstance continues for, or substitute arrangements satisfactory to the Sukuk Trustee are not put in place within thirty (30) days provided that the Relevant Party is using best endeavours to avoid the unlawfulness or to put in place such arrangements; (h) any of the assets, undertakings, rights or revenue of any Relevant Party are seized, expropriated, nationalised or compulsory acquired (whether or not for fair compensation) by or under the authority of any governmental body which have or might have a Material Adverse Effect; (i) (i) any governmental authorisation (other than the SPP Licence) is revoked, terminated, withheld, invalidated, cancelled or not renewed or modified or amended or a notice of violation is issued under any governmental authorisation by the issuing agency or other governmental instrumentality having jurisdiction thereover, or any proceeding is commenced by any governmental instrumentality for the purpose of modifying, revoking, terminating, withholding, invalidating or cancelling any governmental authorisation and in each case in a manner which have or might have a Material Adverse Effect; (ii) the SPP Licence is revoked, terminated, withheld, invalidated, cancelled or not renewed or modified or amended or ceases to be in full force and effect without a substitute licence being issued within one hundred and eighty (180) days of such revocation, termination, withholding, invalidation, cancellation, non-renewal, or cessation, as the case may be, and the effect of such modification or amendment would be to prevent the implementation or carrying out of the Project by any Relevant Party; and (iii) any condition or provision of the SPP Licence is not 75
  85. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum complied with and such non-compliance has not been remedied or waived by Suruhanjaya Tenaga in writing (in each case) within thirty (30) days of its occurrence unless the Suruhanjaya Tenaga has permitted the Relevant Party to remedy such noncompliance and the Relevant Party has demonstrated to the satisfaction of the Sukuk Trustee by the thirtieth (30th) day after its occurrence that it will remedy such noncompliance within ninety (90) days of its occurrence or such other cure period as may be permitted or required by Suruhanjaya Tenaga; (j) any Relevant Party ceases to be the sole, lawful and beneficial owner of, or to have good title to, all or any part of the assets of the Relevant Party (other than amounts deposited in the Distribution Account) or ceases to be the sole party entitled to the revenues generated by the Project, which have or might have a Material Adverse Effect, except as allowed in the Transaction Documents; (k) any party repudiates any of the Project Documents, the Transaction Documents or the Interco Financing Documents to which it is a party or any Relevant Party does or causes to be done any act or thing evincing an intention to repudiate any of the Project Documents, the Transaction Documents or the Interco Financing Documents to which it is a party; (l) suspension of construction work on the whole or any material part of any of the Projects, other than as a result of force majeure, and such suspension continues uncured or is not remedied to the satisfaction of the Sukuk Trustee for a period ending on the date falling on the earlier of (i) sixty (60) days prior to the end of any cure or remedy period relating to such suspension expressly provided for under the relevant Project Document and (ii) one hundred and eighty (180) days from the date of such suspension; (m) (i) TNB issues a notice of breach under any of the PPAs and the event in respect of which such notice was issued is not cured by the cure period applicable thereto as provided in such PPA, or any other right to terminate any of the PPAs accrues in favour of TNB under such PPA; (ii) TNB or the Suruhanjaya Tenaga exercises its step-in rights under any of the PPAs or the SPP Licence as a result of the Relevant Party's default under any of the PPAs or the SPP Licence, or gives written notice of an intention to exercise such step-in 76
  86. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum rights; (iii) the COD of a Plant has not occurred by the date falling one hundred and eighty (180) days after the Scheduled COD of such Plant or any extension thereof; (iv) TNB exercises its right to terminate any of the PPAs; (vi) an event of force majeure continues for longer than one hundred and eighty (180) days under any of the PPAs; or (vii) an event of force majeure occurs under any Project Document (other than in relation to the PPAs) and such event has or would have a Material Adverse Effect; (n) (i) any Security Document or Project Company Guarantee ceases to be in full force and effect or ceases to be effective to create the Security Interest or to provide the priority of security purported to be created thereunder; or (ii) for whatever reason, any of the Security Interests created under any Security Document or Project Company Guarantee cannot be perfected or is in jeopardy or rendered invalid or defective in any way; (o) any Project Company does not pay any amount payable by it under the Interco Financing Documents when due unless such failure to pay is remedied within three (3) business days from its due date; (p) any Relevant Party becomes unable to pay any of its debts generally as they fall due or suspends or threaten to suspend making payments with respect to any class of its debts; (q) any other event or series of events occurs which may have a Material Adverse Effect, and, in the case of an event or series of events which in the opinion of the Sukuk Trustee is capable of being remedied, the Relevant Party does not remedy such event(s) within thirty (30) days after the Relevant Party became aware or has been notified by the Security Agent of the failure, whichever is earlier; (r) any representation or warranty made by any Relevant Party under any provision of the Transaction Documents to which it is a party or any information, notice, opinion or certificate or other document delivered pursuant to the terms of the Transaction Documents proves to have been incorrect or misleading in any material respect as of the date at which such representation or warranty is made or repeated, or the date at which such information, notice, opinion, certificate or 77
  87. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum other document is delivered (in each case) by reference to the facts and circumstances existing at such date, unless the circumstances giving rise to the misrepresentation are capable of remedy and are remedied within fourteen (14) days of the date on which (i) the Sukuk Trustee gives notice to the relevant Relevant Party to do so or (ii) the relevant Relevant Party becomes aware of such misrepresentation, whichever is earlier; (s) a winding-up order has been made against any Relevant Party or a security provider or any step is taken for the winding up, dissolution or liquidation of any Relevant Party or security provider or a resolution is passed for the winding up of any Relevant Party or security provider or a petition for winding up is presented against the any Relevant Party or security provider (unless such petition is frivolous or vexatious or related to a claim to such Relevant Party or security provider have a good defence or which is being contested in good faith by such Relevant Party or security provider) and the Relevant Party or security provider has not taken any action in good faith to set aside such petition or the petition is not withdrawn or discharged within thirty (30) days from the date of service of such winding up petition; (t) any Relevant Party or security provider convenes a meeting of creditors or proposes or makes any arrangement including any scheme of arrangement or composition or begins negotiations with its creditors, or takes any proceedings or other steps with a view to a rescheduling or deferral of all or any part of its indebtedness or a moratorium is agreed or declared by a court of competent jurisdiction in respect of or affecting all or any part of its indebtedness or any assignment for the benefit of its creditors (other than for the purposes of and followed by a reconstruction previously approved by the Sukuk Trustee, unless during or following such reconstruction, the Relevant Party or security provider becomes or is declared to be insolvent); (u) an encumbrancer takes possession of, or a trustee, receiver, receiver and manager or similar officer is appointed in respect of the whole or substantial part of the assets of any Relevant Party or security provider, or distress, legal process, sequestration or any form of execution is levied or enforced or sued out against such assets which may have a Material Adverse Effect and is not discharged within thirty (30) days, or any Security 78
  88. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Interest which may for the time being affect any of its assets becomes enforceable; (v) any indebtedness for borrowed moneys (other than the inter-company financing under the Interco Financing Documents) of any of the Project Company becomes due or payable or capable of being declared due and payable prior to its stated maturity, or any security created to secure such indebtedness becomes enforceable or any guarantee or similar obligations of any of the Project Company is not discharged at maturity or when called or any of the Project Company goes into default under, or commits a breach of, any agreement or instrument relating to any such indebtedness, guarantee or other obligations; (w) any of the Project Land are seized, expropriated, nationalised or compulsory acquired (whether or not for fair compensation) by or under the authority of any governmental body which have or might have a Material Adverse Effect; and (x) any other Event of Default to be mutually agreed between the Issuer and the Principal Adviser. Upon the occurrence of an Event of Default under the Green SRI Sukuk which is continuing, the Sukuk Trustee may or shall (if directed to do so by an extraordinary resolution of the Sukukholders) declare that an Event of Default has occurred whereupon the Deferred Sale Price (subject to Ibra’) shall become immediately due and payable in accordance with the terms of the relevant Transaction Documents and the Project Company Guarantees shall become enforceable in accordance with their respective terms. For the avoidance of doubt, upon the declaration of Event of Default, a claim on all Project Company Guarantees will be made simultaneously. (27) Governing laws : (28) Provisions on buy- : back, if applicable Laws of Malaysia. Provisions on buy-back, details as follows: Purchase and cancellation The Issuer and its subsidiaries or its agent may at any time purchase the Green SRI Sukuk in the open market at any price, but any Green SRI Sukuk repurchased by the Issuer and its subsidiaries or its agent shall be cancelled and cannot be resold. (29) Provisions on early : redemption, if applicable No provision for early redemption. 79
  89. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (30) Voting (31) Permitted investments, applicable : As this is an one-off issuance, voting shall be carried out on a collective basis. : Permitted Investments shall include Shariah-compliant investment products approved by the SAC of the SC and/or BNM’s Shariah Advisory Council. Permitted Investments are as follows: if (i) wadiah and other Islamic deposits under Shariah principles with licensed financial institutions; (ii) Islamic banker acceptances, Islamic bills, Islamic money market instruments issued by licensed financial institutions with a short-term rating of P1 or MARC-1 and a minimum long-term rating of AA3 or AA- or its equivalent; (iii) Islamic money market funds which are approved by the SC; (iv) Islamic principal guaranteed structured investments approved by BNM and issued by licensed financial institutions with a short-term rating of P1 or MARC-1 and a minimum long-term rating of AA3 or AA- or its equivalent or their local or foreign equivalents; and (v) Islamic treasury bills, Islamic money market instruments, and sukuk issued by BNM or the Government of Malaysia. Such funds utilised for Permitted Investments shall not be held for trading and shall be remitted to the relevant Designated Accounts (except for the Distribution Account), as the case may be, no later than three (3) business days prior to the dates when such monies will be needed to meet any payment obligations of the Issuer and/or the Project Companies when due and payable. (32) Other terms conditions 1. and Identified assets : Shariah-compliant commodities (excluding ribawi items in the category of medium of exchange such as currency, gold and silver) which are provided through Bursa Suq alSila’ and/or such other independent commodity platform acceptable to the Shariah Adviser, which will be identified on or prior to the issuance of the Green SRI Sukuk (“Commodities”). 2. Purchase and : selling price/ rental (where applicable) The Commodity Purchase Price and the Deferred Sale Price shall be determined prior to the issuance of the Green SRI Sukuk. The Commodity Purchase Price of the Commodities shall be in line with the asset pricing 80
  90. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum requirement stipulated under the LOLA Guidelines. 3. Profit Rate : The profit rates, which shall be on a fixed rate basis, for each tranche of the Green SRI Sukuk will be determined and agreed between the Issuer and the Joint Lead Managers prior to the issuance of the Green SRI Sukuk. 4. Profit Payment : Frequency The periodic profit payments, calculated at the profit rate(s) on the nominal value of the relevant tranche of Green SRI Sukuk (“Periodic Profit Payments”) shall be payable semi-annually in arrears with the first Periodic Profit Payment to be made six (6) months from the issue date of the Green SRI Sukuk with the last Periodic Profit Payment for each tranche of the Green SRI Sukuk to be made on the maturity date of such tranche. 5. Profit Basis Actual/365 days. Payment : 6. Issue Price : The Green SRI Sukuk may be issued at par, premium or discount to the nominal value and the issue price shall be calculated in accordance with MyClear Rules and Procedures (as defined in item 17 of the section entitled “Other Terms and Conditions - Definitions”). 7. Form and : Denomination The Green SRI Sukuk shall be issued in accordance with MyClear Rules and Procedures. The Green SRI Sukuk shall be represented by a global certificate to be deposited with BNM, and is exchanged for a definitive bearer form only in certain limited circumstances. The denomination of the Green SRI Sukuk shall be RM1,000 or in multiples of RM1,000 at the time of issuance or, subject to MyClear Rules and Procedures, such other denominations as may be agreed between the Issuer and the Facility Agent. 8. Details Utilisation Proceeds The Issuer shall undertake to use the Green SRI Sukuk proceeds only for the following Shariah-compliant utilisations in connection with the Projects which shall be Eligible SRI project: on : of (i) pay/advance to each Project Company as intercompany advances under the Interco Financing Documents to partially fund the respective Project Company’s project development cost which include:(a) costs and expenses payable under the EPC Contracts; (b) profit payments payable under the Interco Financing Documents which amounts in aggregate are equivalent to Periodic Profit Payments under the Green SRI Sukuk payable during construction period of the 81
  91. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Projects; (c) project development fee payable under the Project Development Agreements which includes, inter alia, (i) all fees, expenses and all other amounts in connection with the Green SRI Sukuk accrued prior to the issuance of the Green SRI Sukuk as confirmed under the confirmation provided for purposes of compliance of conditions precedent under item B(vi) of the section entitled “Conditions Precedent” and (ii) the Sukuk Trustee’s Reimbursement Account Deposit; (d) prefund of the finance service reserve account payment payable under each of the Interco Financing Documents which amount in aggregate shall be equivalent to one (1) semi-annual Periodic Profit Payment under the Green SRI Sukuk; (e) costs and expenses payable under the performance bond/security to be given or procured for the benefit of TNB in accordance with the PPA; (f) construction term management fee payable under the AMAs, project operations fee payable under the PMAs and the fees payable under the O&M Agreements, stamp duties and other development costs not covered under the Project Development Agreement subject to an aggregate limit of up to RM 15 million; (g) taxes and GST payable in relation to the Project; (collectively, “Project Total Cost”); The amounts payable under items (c)(i) and (c)(ii) above under the project developments fees shall be deducted upfront from the proceeds of the Green SRI Sukuk on the issue date of the Green SRI Sukuk. 9. Status : The Green SRI Sukuk will constitute direct, unconditional and secured obligations of the Issuer and at all times rank pari passu in all respects amongst themselves and at least pari passu with the claims of all the Issuer’s unsecured and unsubordinated creditors, except for obligations mandatorily preferred by law generally. 10. Sukuk Trustee’s : The Issuer shall open and maintain an account designated 82
  92. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum as “Sukuk Trustee’s Reimbursement Account” (as required under the SC’s Trust Deeds Guidelines) (“Sukuk Trustee’s Reimbursement Account”) in which a sum of RM30,000.00 as the Sukuk Trustee Reimbursement Account Deposit is to be deposited therein. The Sukuk Trustee’s Reimbursement Account shall be operated by the Sukuk Trustee and the monies shall only be used strictly by the Sukuk Trustee in carrying out its duties in relation to the occurrence of an Event of Default as provided in the Trust Deed. The Sukuk Trustee Reimbursement Account Deposit in the Sukuk Trustee’s Reimbursement Account shall be maintained at all times as long as there is any amount outstanding under the Green SRI Sukuk. Reimbursement Account The Sukuk Trustee Reimbursement Account Deposit may be invested in the manner provided in the Trust Deed, with profit from the investment to accrue to the Issuer. The Sukuk Trustee Reimbursement Account Deposit shall be returned to the Issuer upon full redemption of the Green SRI Sukuk in the event there is no Events of Default. 11. Taxation : All payments by the Issuer shall be made without withholding or deductions for or on account of any present or future tax, duty or charge of whatsoever nature imposed or levied by or on behalf of Malaysia or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law, in which event the payer shall not be required to make such additional amount so that the payee would receive the full amount which the payee would have received if no such withholding or deductions are made. 12. Jurisdiction : The Issuer and each Project Company shall unconditionally and irrevocably submit to the exclusive jurisdiction of the courts of Malaysia. 13. Disclosure of the : following: (a) If any Relevant Party or its board members have been convicted or charged with any offence under any securities laws, corporation laws or other laws involving fraud or dishonesty in a court of law, or if None. 83
  93. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum any action has been initiated against any Relevant Party or its board members for breaches of the same, for the past ten years prior to the lodgement /since incorporation (for issuer incorporated less than ten years); and (b) If any Relevant Party has been subjected to any action by the stock exchange for any breach of the listing requirements or rules issued by the stock exchange, for the past five years prior to the lodgement 14. Conditions Subsequent Not applicable. : Including but not limited to the following: (a) No later than 31 October 2017 (or such longer period as may be agreed by the Security Agent in writing), receipt of documentary evidence from the Issuer’s solicitor in respect of the presentation for registration of (i) the lease under the Principal Lease Agreement (Terengganu) and (ii) the sublease under the Project Land Lease Agreement (Terengganu); (b) No later than 31 October 2017 (or such longer period as may be agreed by the Security Agent in writing), receipt of land search results indicating that private caveats have been lodged by QSP (Terengganu) against the Project Land (Terengganu) pending the registration of the sublease with the appropriate authority; and (c) Such other conditions subsequent as may be mutually agreed between the Issuer and the Principal Adviser. 84
  94. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 15. Equity Provider’s Undertakings 16. Shareholder’s Undertaking : : A. Prior to the date falling on the fifth (5th) anniversary of All Plant COD, the Equity Provider shall not transfer ownership of the RCPS issued by the Issuer. B. Subsequent to the period falling on the fifth (5th) anniversary of All Plant COD and up until the final maturity date of the Green SRI Sukuk: (i) the Equity Provider shall not transfer ownership of the RCPS issued by the Issuer as long as the conversion of the Designated RCPS into ordinary shares of the Issuer has not occurred; and (ii) upon conversion of the Designated RCPS into ordinary shares of the Issuer, any change in the ownership of the Issuer by the Equity Provider shall be subject to the consent of the Sukuk Trustee. Prior to the date falling on the fifth (5th) anniversary of All Plant COD, the Shareholder shall wholly own the Issuer. Subsequent to the date falling on the fifth (5th) anniversary of the All Plant COD and up until the final maturity date of the Green SRI Sukuk, the Shareholder shall directly or indirectly own at least fifty one percent (51%) of the ordinary shares issued by the Issuer. 17. Definitions: AMAs : The Asset Management Agreements, the Asset Management Agreement (Issuer and Project Co) and the Asset Management Agreement (Issuer) and “AMA” shall where the context so requires be a reference to any one or more of them. Asset : Management Agreement (Issuer and QSP (Kedah)) The asset management agreement dated 29 May 2017 entered into between QSP (Kedah) and the Issuer (as may be amended or supplemented from time to time). Asset : Management Agreement (Issuer and QSP (Melaka)) The asset management agreement dated 29 May 2017 entered into between QSP (Melaka) and the Issuer (as may be amended or supplemented from time to time). Asset Management Agreement The asset management agreement dated 29 May 2017 entered into between QSP (Terengganu) and the Issuer (as may be amended or supplemented from time to time). : 85
  95. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (Issuer and QSP (Terengganu)) Asset Management Agreement (Issuer) : The asset management agreement dated 26 October 2016 entered into between the Issuer and Scatec Solar ASA and novated by way of a novation agreement dated 29 May 2017 between Scatec Solar ASA, the Issuer and Scatec Solar Solutions Malaysia Sdn. Bhd. (as may be amended or supplemented from time to time). Asset Management Agreement (Kedah) : The asset management agreement dated 26 October 2016 entered into between QSP (Kedah) and Scatec Solar ASA and novated by way of a novation agreement dated 29 May 2017 between Scatec Solar ASA, QSP (Kedah) and Scatec Solar Solutions Malaysia Sdn Bhd (as may be amended or supplemented from time to time). Asset Management Agreement (Melaka) : The asset management agreement dated 26 October 2016 entered into between QSP (Melaka) and Scatec Solar ASA and novated by way of a novation agreement dated 29 May 2017 between Scatec Solar ASA, QSP (Melaka) and Scatec Solar Solutions Malaysia Sdn Bhd (as may be amended or supplemented from time to time). Asset Management Agreement (Terengganu) : The asset management agreement dated 26 October 2016 entered into between QSP (Terengganu) and Scatec Solar ASA and novated by way of a novation agreement dated 29 May 2017 between Scatec Solar ASA, QSP (Terengganu) and Scatec Solar Solutions Malaysia Sdn Bhd (as may be amended or supplemented from time to time). Asset Management Agreements : The Asset Management Agreement (Kedah), Asset Management Agreement (Melaka) and Asset Management Agreement (Terengganu), and “Asset Management Agreement” shall where the context so requires be a reference to any one or more of them. Asset : Management Agreements (Issuer and Project Co) The Asset Management Agreement (Issuer and QSP (Kedah)), Asset Management Agreement (Issuer and QSP (Melaka)) and Asset Management Agreement (Issuer and QSP (Terengganu)), and “Asset Management Agreement (Issuer and Project Co)” shall where the context so requires be a reference to any one or more of them. Commercial : Operation Date (“COD”) With respect to each Plant, the date upon which each of the conditions to the "Commercial Operation Date" (as defined under the PPAs) for such Plant as set out in clause 3.3 of the relevant PPA have been satisfied. Consolidated Annual Budget The consolidated annual budget of the Issuer and the respective Project Companies setting out the monthly breakdown on payments required in accordance with the : 86
  96. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project’s final cashflow projections. Designated RCPS Eligible projects : The total of 72,450,000 of the RCPS issued by the Issuer and subscribed by the Equity Provider which shall be converted into ordinary shares of the Issuer, representing forty nine percent (49%) of ownership in the Issuer at any time after the fifth (5th) anniversary after COD. SRI : The Eligible SRI projects has the meaning ascribed to it under Chapter 7, Part 3, Section B of the LOLA Guidelines. The Green SRI Sukuk has been accorded a Dark Green shading by The Center for International Climate and Environmental Research – Oslo (CICERO). The Projects would be deemed to be an Eligible SRI project falling under section 7.04(b), Chapter 7, Part 3, Section B of the LOLA Guidelines i.e new or existing renewable energy (solar) sector of the Eligible SRI project sector. EPC Contract : (Kedah) The engineering procurement and construction contract dated 28 February 2017 entered into between QSP (Kedah) and the EPC Contractor and supplemented by the letters dated dated 11 May 2017 and 22 May 2017 (as may be amended or supplemented from time to time). EPC Contract : (Melaka) The engineering procurement and construction contract dated 28 February 2017 entered into between QSP (Melaka) and the EPC Contractor and supplemented by the letters dated dated 11 May 2017 and 22 May 2017 (as may be amended or supplemented from time to time). EPC Contract : (Terengganu) The engineering procurement and construction contract dated 28 February 2017 entered into between QSP (Terengganu) and the EPC Contractor and supplemented by the letter dated 22 May 2017 (as may be amended or supplemented from time to time). EPC Contractor : Scatec Solar Solutions Malaysia Sdn. Bhd. (Company No. 1211560-V). EPC Contracts : The EPC Contract (Kedah), EPC Contract (Melaka) and EPC (Terengganu), and “EPC Contract” shall where the context so requires be a reference to any one or more of them. Equity Contribution Agreement : An equity contribution agreement entered or to be entered into by the Shareholder, the Equity Provider, the Issuer and the Security Agent setting out, inter alia, the undertaking of each the Shareholder and the Equity Provider to provide capital contribution to the Issuer (as may be amended or supplemented from time to time). Facility : The agreement to be entered into among the Issuer, the 87
  97. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Agreement Principal Adviser, the Joint Lead Arrangers, the Joint Lead Managers and the Facility Agent, setting out, inter alia, the terms and conditions in connection with the issuance of the Green SRI Sukuk. Interco Financing : Documents The intercompany financing documents entered or to be entered into by the Issuer with each Project Company relating to the following: Material Adverse : Effect MyClear Rules : and Procedures (a) the advancement of the Green SRI Sukuk proceeds to each Project Company in connection with each Project; (b) the validity, legality, binding effect or enforceability of the Transaction Documents, the Interco Financing Documents or any of the Security Interests granted pursuant thereto or any of the rights or remedies of any secured party thereunder; and (c) any other arrangements deemed material to the ability of the Issuer to perform or comply with any of its obligations under the Transaction Documents in respect of the Green SRI Sukuk to be mutually agreed between the Principal Adviser, each Project Company and the Issuer. A material adverse effect on: (a) the ability of a Relevant Party to perform or comply with any of its respective obligations under the Transaction Documents, the Interco Financing Documents and the Project Documents in accordance with the terms thereof; or (b) the validity, legality, binding effect or enforceability of the Transaction Documents, the Interco Financing Documents or to any of the Security Interests granted pursuant thereto or to any of the rights or remedies of any secured party thereunder; or (c) the operations, business, property, assets, liabilities or financial condition of a Relevant Party. (1) the Participation and Operation Rules for Payment and Securities Services issued by Malaysian Electronic Clearing Corporation Sdn Bhd (“MyClear”); (2) the Operational Procedures for Services issued by MyClear; and (3) the Operational Procedures for Malaysian Ringgit 88 Securities
  98. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (MYR) Settlement in RENTAS issued by MyClear; or their replacement thereof (collectively, the “MyClear Rules and Procedures”) applicable from time to time. O&M Agreement : (Kedah) The operations and maintenance agreement dated 29 May 2017 entered into between QSP (Kedah) and Scatec Solar Solutions Malaysia Sdn. Bhd. (as may be amended or supplemented from time to time). O&M Agreement : (Melaka) The operations and maintenance agreement dated 29 May 2017 entered into between QSP (Melaka) and Scatec Solar Solutions Malaysia Sdn. Bhd. (as may be amended or supplemented from time to time). O&M Agreement : (Terengganu) The operations and maintenance agreement dated 29 May 2017 entered into between QSP (Terengganu) and Scatec Solar Solutions Malaysia Sdn. Bhd. (as may be amended or supplemented from time to time). O&M Agreements : The O&M Agreement (Kedah), O&M Agreement (Melaka) and O&M (Terengganu), and “O&M Agreement” shall where the context so requires be a reference to any one or more of them. PB Facility : The performance bond facility of up to RM27,000,000, which shall include overdraft, letter of guarantee, letter of credit, trust receipt and other working capital facilities to be granted to the Issuer in connection with the Project Companies’ obligations under the PPAs. Permitted Indebtedness : In respect of each Relevant Party, Permitted Security Interest : (a) the PB Facility; (b) any subordinated shareholder financings provided to the Issuer; and (c) the inter-company financing under the Interco Financing Documents. The following Security Interests: (a) those Security Interests granted in favour of the PB Facility provider; (b) those Security Interests contemplated under the Transaction Documents; and (c) those Security Interests arising by operation of law and contractual liens and retention of title arrangements, in each case arising in the ordinary course of the Issuer and/or the Project Companies' business. 89
  99. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Plants : The solar photovoltaic energy generating facility with a capacity of 50MWac and ancillary equipment and facilities in Gurun (Kedah), Merchang (Terengganu) and Jasin (Melaka) respectively to be constructed in accordance with the terms and conditions of its respective PPA and EPC Contract, and “Plant” shall where the context so requires be a reference to any one or more of them. PMAs The Project Management Agreements and the Project Management Agreement (Issuer) and “PMA” shall where the context so requires be a reference to any one or more of them. Potential Event : of Default Any event or circumstance which, with the giving of notice, the making of any determination by the Sukuk Trustee (where the factual circumstances permit the making of such determination) or the expiry of any grace period (or any combination of the above), and on the basis that it is still continuing, would become an Event of Default. Power Purchase : Agreement (Kedah) The power purchase agreement dated 3 November 2016 entered into between QSP (Kedah) with TNB (as may be amended or supplemented from time to time). Power Purchase : Agreement (Melaka) The power purchase agreement dated 3 November 2016 entered into between QSP (Melaka) with TNB (as may be amended or supplemented from time to time). Power Purchase : Agreement (Terengganu) The power purchase agreement dated 3 November 2016 entered into between QSP (Terengganu) with TNB (as may be amended or supplemented from time to time). PPAs : The Power Purchase Agreement (Kedah), Power Purchase Agreement (Melaka) and Power Purchase Agreement (Terengganu), and “PPA” shall where the context so requires be a reference to any one or more of them. Principal Lease : Agreement (Kedah) The principal lease agreement to be entered into between TH Mestika Sdn Bhd and the registered proprietors of the Project Land in Gurun, Kedah (as may be amended or supplemented from time to time). Principal Lease : Agreement (Terengganu) The principal lease agreement dated 7 November 2016 entered into between Kerajaan Negeri Terengganu Darul Iman, Lembaga Tabung Amanah Warisan Negeri Terengganu, Solartif Sdn Bhd (Company No. 783663-T) and EGN Network Sdn Bhd (Company No. 632441-K) and the supplemental to be entered into in relation to the Project Land in Merchang, Terengganu (as may be amended or supplemented from time to time). Project Collectively: : 90
  100. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Companies (a) Quantum Solar Park (Kedah) Sdn Bhd (Company No. 1201799-K) (“QSP (Kedah)”); (b) Quantum Solar Park (Terengganu) Sdn Bhd (Company No. 1201798-W) (“QSP (Terengganu)”); and (c) Quantum Solar Park (Melaka) Sdn Bhd (Company No. 1201801-T) (“QSP (Melaka)”), and “Project Company” shall where the context so requires be a reference to any one or more of them. Project Company : RPS Subscription Agreement (Kedah) The redeemable preference shares subscription agreement dated 31 May 2017 entered into between QSP (Kedah) and the Issuer (as may be amended or supplemented from time to time). Project Company : RPS Subscription Agreement (Melaka) The redeemable preference shares subscription agreement dated 31 May 2017 entered into between QSP (Melaka) and the Issuer (as may be amended or supplemented from time to time). Project Company : RPS Subscription Agreement (Terengganu) The redeemable preference shares subscription agreement dated 31 May 2017 entered into between QSP (Terengganu) and the Issuer (as may be amended or supplemented from time to time). Project Company : RPS Subscription Agreements The Project Company RPS Subscription Agreement (Kedah), Project Company RPS Subscription Agreement (Melaka) and Project Company RPS Subscription Agreement (Terengganu), and “Project Company RPS Subscription Agreement” shall where the context so requires be a reference to any one or more of them. Project Development Agreement (Kedah) : The project development agreement dated 23 May 2017 entered into between QSP (Kedah) and Itramas Technology Sdn. Bhd. (as may be amended or supplemented from time to time). Project Development Agreement (Melaka) : The project development agreement dated 23 May 2017 entered into between QSP (Melaka) and Itramas Technology Sdn. Bhd. (as may be amended or supplemented from time to time). Project Development Agreement (Terengganu) : The project development agreement dated 23 May 2017 entered into between QSP (Terengganu) and Itramas Technology Sdn. Bhd. (as may be amended or supplemented from time to time). 91
  101. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project Development Agreement Letters : Project Development Agreements Project Documents The letters of agreement dated 23 May 2017 between the Issuer, each of the Project Companies and the Shareholder on the payment arrangement for the project development fees under the Project Development Agreements. The Project Development Agreement (Kedah), Project Development Agreement (Melaka) and Project Development Agreement (Terengganu), and “Project Development Agreement” shall where the context so requires be a reference to any one or more of them. : Collectively, the following:(a) the PPAs; (b) the EPC Contracts; (c) the O&M Agreements; (d) the Project Land Lease Agreements; (e) the Asset Management Agreements; (f) the Asset Management Agreement (Issuer); (g) the Asset Management Agreement (Issuer and Project Co); (h) the Project Development Agreements; (i) the Project Development Agreement Letters; (j) the Project Management Agreement (Issuer); (k) the Project Management Agreements; (l) the Principal Lease Agreement (Terengganu); (m) the Principal Lease Agreement (Kedah); (n) all performance and/or maintenance bonds in respect of the Project and all other guarantees, advance payment bonds and other forms of payment or performance security issued in favour of any Project Company pursuant to any Project Documents; (o) the SPP Licence (as defined in the PPAs); and (p) any other agreements and/or documents that is issued to the Issuer and/or to each Project Company or to which the Issuer and/or each 92
  102. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Project Company is a party to, in relation to the Project and mutually agreed between the Issuer and the Principal Adviser to be designated as a “Project Document”. Project Land : Lease Agreement (Kedah) The lease agreement dated 7 November 2016 entered into between QSP (Kedah) and TH Mestika Sdn Bhd for the parcel of land held under HSD 741 to 748, HSD 757 to 759, HSD 760 to 769 and HSD 770 to 775 in Gurun, Kedah and the amended and restated lease agreement to be entered into (as may be amended or supplemented from time to time). Project Land : Lease Agreement (Melaka) The lease agreement dated 10 January 2017 entered into between QSP (Melaka) and Yeng Chong Realty Berhad for the parcel of land held under HSD 6095, PN 56586, PN 31611, PN 31610 and PN 31609 in Jasin, Melaka (as may be amended or supplemented from time to time). Project Land : Lease Agreement (Terengganu) The lease agreement dated 7 November 2016 entered into between QSP (Terengganu), Solartif Sdn Bhd and EGN Network Sdn Bhd for the land measuring approximately 200 acres in Paya Tok Asing, Mukim Merchang, Terengganu (as may be amended or supplemented from time to time). Project Land : Lease Agreements The Project Land Lease Agreement (Kedah), Project Land Lease Agreement (Melaka) and Project Land Lease Agreement (Terengganu), and “Project Land Lease Agreement” shall where the context so requires be a reference to any one or more of them. Project Lands The parcels of land upon which the Projects are to be constructed and located, as more specifically described in the PPAs, and “Project Land” shall where the context so requires be a reference to any one or more of them. : Project Management Agreement (Issuer) The project management agreement dated 23 May 2017 entered into between the Issuer with Itramas Technology Sdn. Bhd. (as may be amended or supplemented from time to time). Project Management Agreement (Kedah) : The project management agreement dated 23 May 2017 entered into between QSP (Kedah) and Itramas Technology Sdn. Bhd. as may be amended or supplemented from time to time). Project Management Agreement (Melaka) : The project management agreement dated 23 May 2017 entered into between QSP (Melaka) and Itramas Technology Sdn. Bhd. (as may be amended or supplemented from time to time). Project Management : The project management agreement dated 23 May 2017 entered into between QSP (Terengganu) and Itramas 93
  103. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Agreement (Terengganu) Technology Sdn. Bhd. (as may supplemented from time to time). Project Management Agreements The Project Management Agreement (Kedah), Project Management Agreement (Melaka) and Project Management Agreement (Terengganu), and “Project Management Agreement” shall where the context so requires be a reference to any one or more of them. Projects be amended or : The development, financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of a solar photovoltaic energy generating facility with a capacity of 50MWac and ancillary equipment and facilities in Gurun (Kedah), Merchang (Terengganu) and Jasin (Melaka) respectively (each a “Project”). BG : A Qualifying BG Bank is a financial institution which has a long term debt rating at or above AAA by RAM Rating Services Berhad or Malaysian Rating Corporation Berhad. RCPS : The redeemable convertible preference shares of up to 126,000,000 to be issued by the Issuer and subscribed by the Equity Provider. RCPS Subscription Agreement : The redeemable convertible preference shares subscription agreement dated 26 October 2016 entered into between the Issuer with Scatec Solar ASA and novated by way of a novation agreement between the Issuer, Scatec Solar ASA and the Equity Provider dated 17 May 2017 (as may be amended or supplemented from time to time). Redemption Amount : The amount equivalent to the Deferred Sale Price determined at the issue date less the aggregate of the Periodic Profit Payment and nominal value paid (if any) less the Ibra’ (if any). RENTAS : Real Time Electronic Transfer of Funds and Securities. Ringgit or RM : The lawful currency of Malaysia. RPS Subscription Agreement : The redeemable preference shares subscription agreement dated 26 October 2016 entered into between the Shareholder and Scatec Solar ASA and novated by way of a novation agreement dated 17 May 2017 between the Shareholder, Scatec Solar ASA and the Equity Provider (as may be amended or supplemented from time to time). Scheduled COD : In relation to each Plant, 31 December 2017. For the avoidance of doubt, in the event Scheduled COD is not a business day and is a Saturday, Sunday or an expected holiday, Scheduled COD shall be the preceding business Qualifying Bank 94
  104. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum day. Security Interest : Any mortgage, pledge, lien, charge, assignment, hypothecation or security interest or any other agreement or arrangement having a similar effect. Shareholder : Quantum Solar Park Malaysia Sdn Bhd (Company No. 1177896-A), a company incorporated in Malaysia directly owning all the ordinary shares issued by the Issuer. Technical Adviser Transaction Documents Mott MacDonald (Malaysia) Sdn Bhd or such other reputable firm of technical advisers as the Security Agent may appoint with the approval of the Issuer (such approval not to be unreasonably withheld or delayed). : Collectively, the following:(a) the Trust Deed; (b) the Facility Agreement; (c) the Deed of Covenants (which includes the Project Company Guarantees); (d) the Islamic agreements; (e) the Securities Lodgement Form; (f) the Equity Contribution Agreement; (g) the Security Documents; (h) the Intercreditor Agreement; and any other agreements (whenever executed) mutually agreed between the Issuer and the Principal Adviser to be designated as a “Transaction Document”. 18. Issuer’s Project Companies’ designated accounts and : The Issuer shall open the following Shariah compliant designated accounts, which are more particularly set out in the section entitled “Details of designated account(s), if applicable”: (1) (2) (3) (4) (5) (6) DA; EA; CA: FSRA; OA; and Distribution Account. Each of the Project Companies shall open the following Shariah compliant designated accounts, which are more particularly set out in the section entitled “Details of designated account (s), if applicable”: 95
  105. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (1) (2) (3) (4) Project Co CA; Project Co RA; Project Co OA; and Project Co MRA. Funds held in each of the Designated Accounts above can be invested in Permitted Investments subject to Permitted Investment provisions. [The rest of this page has been intentionally left blank] 96
  106. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 2.2 Transaction Diagram of the Green SRI Sukuk Steps Description of the Green SRI Sukuk Structure 1 Prior to the issuance of the Green SRI Sukuk, the Sukuk Trustee (on behalf of the investors of the Green SRI Sukuk (“Sukukholders”)), shall enter into an agency agreement (“Agency Agreement”) with QSP Semenanjung to appoint QSP Semenanjung as the agent of the Sukukholders (in such capacity, the “Agent”) to purchase and sell the Commodities. The Agent shall then enter into a “SubAgency Agreement” to appoint the Sukuk Trustee to act as the sub-agent to purchase and sell the Commodities (in such capacity, the “Sub-Agent”). QSP Semenanjung (acting as the buyer (“Buyer”)), shall also enter into a “Sale Agency Agreement” to appoint the Sukuk Trustee to act as its agent (in such capacity, the “Sale Agent”) to sell the Commodities in the event QSP Semenanjung (acting as the Buyer) on-sells the Commodities to Bursa Malaysia Islamic Services Sdn Bhd or such other independent commodity platform (“Commodity Buyer”) once it has purchased the Commodities from the Sukukholders via the Sub-Agent. 2 Pursuant to a commodities murabahah master agreement (“Commodities Murabahah Master Agreement”), to be entered into between QSP Semenanjung (in such capacity, the “Buyer”), the Agent, the Sukuk Trustee (acting on behalf of the Sukukholders) and the Sub-Agent, QSP Semenanjung (acting as the Buyer), shall issue a purchase order (“Purchase Order") to the Agent and the Sub-Agent with an irrevocable undertaking to purchase the Commodities from the Sukukholders via the Sub-Agent at the Deferred Sale Price (as defined below). 97
  107. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Steps Description of the Green SRI Sukuk Structure 3 Based on the Purchase Order, the Sub-Agent via the Commodity Trading Participant (“CTP”) (pursuant to a CTP purchase agreement entered into between the Sub-Agent and the CTP (“CTP Purchase Agreement”) shall purchase the Commodities on a spot basis from commodity vendor(s) in the Bursa Suq Al-Sila’ commodity market or such other independent commodity platform as may be determined by the Shariah Adviser (“Commodity Supplier”) at a purchase price equivalent to the Green SRI Sukuk proceeds (“Commodity Purchase Price”). The Commodity Purchase Price of the Commodities shall be in line with the asset pricing requirement stipulated under the LOLA Guidelines. 4 QSP Semenanjung (acting as the Issuer), shall issue Green SRI Sukuk to the Sukukholders whereby the proceeds thereof shall be used to pay the Commodity Purchase Price. The Green SRI Sukuk shall evidence amongst other things, the Sukukholders’ ownership of the Commodities and once the Commodities are sold to QSP Semenanjung (acting as the Buyer for itself), the Sukukholders’ entitlement to receive the Deferred Sale Price. 5 Upon acquiring the Commodities, the Sub-Agent shall pursuant to the undertaking under the Purchase Order, thereafter sell those Commodities to QSP Semenanjung (acting as the Buyer for itself), for a price equivalent to the Commodity Purchase Price plus the Discounted Amount (as defined below) (if applicable) and the profit margin of the relevant Green SRI Sukuk determined prior to issuance of the Green SRI Sukuk, payable on a deferred payment basis (“Deferred Sale Price”), under the commodities sale and purchase agreement (the “Sale and Purchase Agreement”). “Discounted Amount” means the difference between the nominal value of the Green SRI Sukuk and the Commodity Purchase Price in the case of Green SRI Sukuk issued at a discount. 6 Upon the purchase of the Commodities and pursuant to the Sale Agency Agreement, the Sale Agent shall, via the Commodity Trading Participant (“CTP”) (pursuant to a CTP sale agreement entered into between the Sale Agent and the CTP (“CTP Sale Agreement”)), immediately sell the Commodities to a Commodity Buyer on a spot basis for cash, for an amount equivalent to the Commodity Purchase Price. 7 The Green SRI Sukuk shall be issued with periodic profit payments (“Periodic Profit Payments”). QSP Semenanjung (acting as the Buyer) shall make Periodic Profit Payments forming part of the Deferred Sale Price, on a profit payment date to the Sukukholders during the tenure of the relevant Green SRI Sukuk and the final payment on the maturity date of the relevant Green SRI Sukuk. Upon the Green SRI Sukuk maturity dates or upon the declaration of an Event of Default, the Issuer shall pay the Redemption Amount (as defined below) pursuant to its obligation to pay the Deferred Sale Price for the redemption of the Green SRI Sukuk. Upon full payment of all amounts due and payable under the Green SRI Sukuk, the redeemed Green SRI Sukuk shall be cancelled. “Redemption Amount” is the amount equivalent to the Deferred Sale Price determined at the issue date less the aggregate of the Periodic Profit Payment and nominal value paid (if any) less the Ibra’ (if any). 98
  108. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Steps Description of the Green SRI Sukuk Structure 8 Each of the Project Companies (as defined below) shall provide an unconditional and irrevocable guarantee under the principle of Al-Kafalah to the Security Agent acting for the Sukukholders to guarantee the payment of the nominal value and the Periodic Profit Payments of the Green SRI Sukuk in such proportion which have been advanced by the Issuer to that Project Company under the relevant Interco Financing Documents. The Project Company Guarantees would be triggered upon the declaration of any of the Events of Default, whereupon a claim on all Project Company Guarantees will be made simultaneously. [The rest of this page has been intentionally left blank] 99
  109. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 2.3 Diagram Illustrating the Flow of Monies 100
  110. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum [The rest of this page has been intentionally left blank] 101
  111. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum SECTION 3 Information on the Issuer 3.1 Incorporation The Issuer was incorporated in Malaysia on 6 September 2016 under the Companies Act. Its registered address is at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur. 3.2 Principal Activities The principal activities of the Issuer are, amongst others, to carry on the business of solar energy power generation from renewable sources, solar panels manufacturing, sale of electricity, any other solar related activities and to be involved in all other types of businesses related to the same, investments and general tradings. The Issuer was also established to act as a funding vehicle pursuant to the financing structure in connection with the Projects (as detailed in Section 1.3 of this Information Memorandum entitled “Project Overview”). 3.3 Share Capital and Shareholder As at the LPD, the issued and fully paid-up share capital of the Issuer is as follows: Issued and Fully Paid-Up Share Capital RM2.00 comprising 2 ordinary shares. As at the LPD, the Issuer is wholly owned by the Shareholder. 3.4 Profile of Directors The board of directors of the Issuer and their respective profiles as at the LPD are as follows: Name of Directors Lee Choo Boo Profile of Directors 56 years of age – Malaysian Mr. Lee Choo Boo has a total of thirty (30) years of experience in Light-Emitting Diode (“LED”)-related business and extensive experience in the electronics manufacturing and engineering industry. He started his career as an equipment engineer in Hitachi Semiconductor (Malaysia) Sdn Bhd in 1985 before moving on to Hewlett-Packard Malaysia (“HPM”) in 1987 as a mechanical design engineer for LED products. At HPM, he held numerous positions in Research and 102
  112. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Name of Directors Profile of Directors Development and Engineering and Production for High Brightness LED Manufacturing. His research work in the area of LED-based electrophotographic printheads earned him the distinction of becoming the first Malaysian engineer in HPM to obtain a United States patent. He left HPM after ten (10) years to join Read-Rite Malaysia, a United States-based disk drive company, as Director of Operations. He was responsible for the entire manufacturing and engineering functions in the company, with a workforce of over four thousand and five hundred (4,500) people. He founded ITRAMAS Corporation Sdn Bhd in 1999, going into the areas of Intelligent Transport Systems (“ITS”), Security and Surveillance Solutions and Solid State (LED) Lighting. He sits on the board of several companies in Malaysia and the United States. He was the first Deputy President of the Intelligent Transport System Society of Malaysia and is currently a graduate member of the Institution of Engineers, Malaysia, as well as an Industry Advisory Panel Member of Monash University’s School of Electrical & Computer System Engineering. Mr. Lee Choo Boo holds a Bachelor’s Degree in Mechanical Engineering from the University of Malaya and a Masters in Business Administration (Distinction) from the University Sains Malaysia. Gan Geik Lee 55 years of age – Malaysian Ms. Gan Geik Lee is one of the founders of ITRAMAS Corporation Sdn Bhd in 1999. She has more than twenty (20) years experience in LED-related business. She was formerly a Senior Operations Manager in a major American multinational company. She has fourteen (14) years of experience in operations and material management in high volume manufacturing environment in Malaysia. She has an extensive experience in product transfer and participated in ITRAMAS Corporation Sdn Bhd’s product development and sourcing activities held in various parts of the world (for example, Taiwan, Hong Kong, China, Indonesia, United States and Europe). She also led ITRAMAS Corporation Sdn Bhd’s implementation of quality and productivity management programs. Prior to that, she was a management consultant and trainer for several local small medium industry companies. Ms. Gan Geik Lee holds a Bachelor’s Degree in Applied Science (Hons) from the national University of Malaya. 103
  113. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 3.5 Profile of Key Management Personnel The key management personnel of the Issuer and his profile as at the LPD is as follows: Name of Key Management Personnel Azman Zainuddin Profile of Key Management Personnel 46 years of age – Malaysian Mr. Azman Zainuddin joined ITRAMAS Corporation Sdn Bhd in 2002 and has more than twenty (20) years of working experience comprising of five (5) years in technical design and solution development, eight (8) years in project management, technology transfer and system integration and over seven (7) years in business development. He is in charge of the following roles in ITRAMAS Corporation Sdn Bhd:  ITRAMAS Corporation Sdn Bhd’s new business developments in Malaysia and in international markets, leading and fostering client-relationship both in public and private sectors, as well as enhancing the roles and approaches of customer service;  developing the relevant expertise for various internal departments and revamping the business developments and sales department to meet ITRAMAS Corporation Sdn Bhd’s sales target;  leading and the improving ITRAMAS Corporation Sdn Bhd’s overall market reputation through its involvement in national level technical committees, non-profit industry organizations and platforms. Currently, he holds the position of Chief Executive Officer in QSP Malaysia, the Issuer and the Project Companies. [The rest of this page has been intentionally left blank] 104
  114. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Section 4 Information on the Project Companies 4.1 Incorporation Each of the Project Companies was incorporated in Malaysia on 14 September 2016 under the Companies Act. Each of the Project Companies is a private company limited by shares with registered address at Unit 30-01, Level 30, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8 Jalan Kerinchi, 59200 Kuala Lumpur. 4.2 Principal Activities The principal activities of each of the Project Companies are, amongst others, to carry on the business of solar energy power generation. 4.3 Share Capital and Shareholder As at the LPD, the issued and fully paid-up share capital of each of the Project Companies is as follows: Issued and Fully Paid-Up Share Capital RM2.00 comprising 2 ordinary shares. As at the LPD, all the Project Companies are wholly owned by the Issuer. 4.4 Profile of Directors The board of directors of each of the Project Companies and their respective profiles as at the LPD are as follows: Name of Directors Profile of Directors Lee Choo Boo Please refer to Section 3.4 of this Information Memorandum entitled “Information on the Issuer – Profile of Directors” for the profile of Mr. Lee Choo Boo. Gan Geik Lee Please refer to Section 3.4 of this Information Memorandum entitled “Information on the Issuer – Profile of Directors” for the profile of Ms. Gan Geik Lee. [The rest of this page has been intentionally left blank] 105
  115. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum SECTION 5 Information on the Shareholder 5.1 Incorporation QSP Malaysia was incorporated in Malaysia on 2 March 2016 under the Companies Act. It was incorporated as a private company limited by shares with a registered address at 29A, Lorong P.S. 1, Bandar Perda, 14000 Bukit Mertajam, Bukit Mertajam. 5.2 Principal Activities QSP Malaysia’s principal activities are to carry on the business of solar energy power generation from renewable sources, solar panels manufacturing, sale of electricity, any other solar related activities and to be involved in all other types of businesses related to the same, investments and general tradings. 5.3 Share Capital As at the LPD, the issued and fully paid-up share capital of QSP Malaysia is as follows: Issued and Fully Paid-Up Share Capital 5.4 RM300,000.00 comprising 300,000 ordinary shares. Shareholding Structure As at the LPD, the shareholders of QSP Malaysia are as follows: Name of Shareholders 5.5 No. of Ordinary Shares held No. (%) Cam-Lite 100,000 33.33 ItraMAS Tech 100,000 33.33 Maltech 100,000 33.33 Total 300,000 100 Details of the Shareholders of QSP Malaysia Cam-Lite was incorporated in Malaysia on 15 January 2007, with the paid-up share capital of RM100,000.00 as at the LPD. As at the LPD, the shareholders of Cam-Lite are Zainoor bin Sulaiman and Zeliza binti Zainoor. The principal activity of Cam-Lite is trading in electronic and related products and services. ItraMAS Tech was incorporated in Malaysia on 21 October 1999, with the paid-up share capital of RM2,777,777.00 as at the LPD. ItraMAS Tech is eighty three per 106
  116. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum cent (83%) owned by ITRAMAS Corporation Sdn Bhd (Company No. 534964-U), with the remaining shares held by Encik Tunku Hammam Tunku Sulong, Dato‘ Khairuddin bin Ibrahim and Thevarajoo A/L Munusamy (Estate) respectively. ItraMAS Tech is principally involved as contractors for energy efficiency and renewable energy projects related to civil, infrastructure, electrical, mechanical, control and monitoring systems. ItraMAS Tech is also actively involved in general construction of public works and has successfully delivered public projects for the Government in the areas of green technology and public works engineering. Some of the major projects completed by ItraMAS Tech are as follows: (a) Integrated Transport Information System (ITIS) Project - Design, Supply, Deliver, Construct, Install, Test and Commission of Variable Message Signs (VMS) (b) Duta-Ulu Kelang Expressway (DUKE) - Toll Collection System (TCS) and Traffic Control and Surveillance System (TCSS) (c) Ekspresway Lingkaran Tengah (ELITE) - Traffic Control and Surveillance System (TCSS) (d) Kuala Lumpur Putrajaya Highway (KLPH) - Traffic Control and Surveillance System (TCSS) (e) Supply, Installation and Commissioning of Permanent Traffic Data Collection System at 90 Locations in Malaysia (HPU) (f) Senai-Desaru Expressway (SDE) - Traffic Control & Surveillance System (TCSS) and Toll Collection System (TCS) (g) Projek Lebuhraya Kemuning-Shah Alam (LKSA) - Traffic Control and Surveillance System (TCSS) (h) Variable Message Signage (VMS) at Selected Locations Along the NorthSouth Expressway (PLUS) with Centralized Management at Control Centre (i) Area Traffic Monitoring System (ATMC) for the Indonesia Police Department (POLRI) (j) Malaysia Highway Authority (MHA) – National Traffic Monitoring Centre (TMC) Phase II (k) The Design, Manufacture, Supply, Delivery to Site, Installation, Testing and Commissioning of Variable Message Sign (VMS) system at Linkedua (l) SCATS Traffic Controller System, Medini-Iskandar (m) The Design, Manufacture, Supply, Delivery to Site, Installation, Replacement, Testing and Commissioning of Variable Message Signage (VMS) System at Selected Location Along North-South Expressway (n) Fleet Tracking System (FTS) for Syarikat Prasarana Negara Berhad (SPNB) – RapidKL 107
  117. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (o) Traffic Control and Surveillance System (TCSS) for Jambatan Kedua Sdn Bhd (JKSB) (p) Maintenance and System Upgrade for National Traffic Monitoring Centre (TMC). Maltech was incorporated in Malaysia on 5 April 2012, with the paid-up share capital of RM100,000.00 as at the LPD. As at the LPD, the shareholders of Maltech are Ahmad Zaffry bin Sulaiman and Mohd Farid bin Mohamed Sangido. 5.6 Profile of Directors The board of directors of QSP Malaysia and their respective profiles as at the LPD are as follows: Name of Directors Profile of Directors Lee Choo Boo Please refer to Section 3.4 of this Information Memorandum entitled “Information on the Issuer – Profile of Directors” for the profile of Mr. Lee Choo Boo. Gan Geik Lee Please refer to Section 3.4 of this Information Memorandum entitled “Information on the Issuer – Profile of Directors” for the profile of Ms. Gan Geik Lee. [The rest of this page has been intentionally left blank] 108
  118. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Section 6 Information on the Equity Provider 6.1 Incorporation Scatec Solar Malaysia B.V. was incorporated in Netherlands on 16 February 2017 under the laws of Netherlands. It was incorporated as a private limited liability company with a registered address at Overschiestraat 61, 5e verdieping, 1062XD Amsterdam. 6.2 Principal Activities Scatec Solar Malaysia B.V. was incorporated for the purpose of structuring equity coinvestments in single purpose vehicle companies in third country jurisdictions. 6.3 Share Capital and Shareholder As at the LPD, the issued and fully paid-up share capital of Scatec Solar Malaysia B.V. are as follows: Issued Share Capital USD 1,000.00 comprising 100,000 ordinary shares of USD 0.01 each. Paid-Up Share Capital USD 0.00 As at LPD, Scatec Solar Malaysia B.V. is wholly owned by Scatec Solar Netherlands B.V., who in turn is wholly owned by Scatec Solar ASA. Scatec Solar Netherlands B.V. is the holding company of the EPC Contractor (who is a Commission’s approved contractor) and the O&M Contractor in respect of the Projects. 6.4 Profile of Directors The board of directors of Scatec Solar Malaysia B.V. and their respective profiles as at the LPD are as follows: Name of Directors Torstein Berntsen Profile of Directors 46 years of age – Norwegian Mr. Torstein Berntsen is currently Executive Vice President of the “Power Production & Asset Management” department in Scatec Solar ASA. As the head of department of the “Power Production & Asset Management” department, he is responsible for the management of plants in operation, including asset management and operation and maintenance 109
  119. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Name of Directors Profile of Directors services. He has been with Scatec Solar ASA for five (5) years and ten (10) months and had previously held the position of Chief Financial Officer. Mr. Torstein has further been involved in the development, operation and management of projects and business activities in Germany, Italy, Czech, the United Kingdom, Rwanda, South Africa, Egypt and Jordan. Mr. Torstein holds a MSc Business Administration from the Norwegian School of Economics (1995) and is a qualified State Authorized Public Accountant (1997). Avega Netherlands B.V. Avega Netherlands B.V. is a company registered in the Trade Register of the Chamber of Commerce in the Netherlands under number 61016942. It is a private company with limited liability. Please refer to Avega Netherlands B.V.’s website for profile of the three (3) directors of the company: http://avega.nl/whowe-are/our-management/. 6.5 Scatec Solar ASA Scatec Solar ASA was incorporated on 2 February 2007 as a public limited company under the laws of Norway with a registered address at c/o Scatec Solar AS Karenslyst allé 49, 0279 Oslo, Norway. Scatec Solar ASA is an integrated independent solar power producer, delivering affordable, rapidly deployable and sustainable source of clean energy worldwide. Scatec Solar ASA pursues an integrated business model across the complete lifecycle of utility-scale solar photovoltaic power plants including project development and design, financing, engineering, procurement, construction management, operation and maintenance and asset management. It operates subsidiaries in the Czech Republic, South Africa, the U.S., Rwanda, Jordan, Honduras, France and Italy. Scatec Solar ASA develops, builds, owns, operates and maintains solar power plants, and has over fifteen (15) years of experience with an installation track record of power production capacity of close to 600 MW in 2016. It operates a significant backlog and pipeline of projects in Asia, the U.S., Africa, Middle East and North Africa region. Its installation track record comprises of the 75 MW in Kalkbult, 40 MW in Linde and the 75 MW in Dreunberg plants in South Africa, 9 MW ASYV plant in Rwanda, 60 MW Agua Fria plant in Honduras, the Red Hills 104 MW plant in Utah, the U.S. and four 20 MW plants in the Czech Republic. As at the LPD, Scatec Solar ASA has secured a twenty (20) year power plant agreement for a 150 MW solar plant in Brazil and a twenty five (25) year power plant agreement for a 40 MW solar plant 110
  120. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum in Mozambique. With the Projects, the project backlog of Scatec Solar ASA stands at 731 MW as at the LPD. In addition, Scatec Solar ASA has formed a partnership with Africa50 in the 100MW project in Nigeria, Africa’s largest economy. This is the first investment by the Africa50, an independent African infrastructure fund sponsored by the African Development Bank, providing support in project developments in over twenty (20) African countries. On 2 October 2014, the shares of Scatec Solar ASA were listed on the Oslo Stock Exchange under the “SSO” ticker. At as LPD, the market capitalisation of Scatec Solar ASA is equivalent to United States Dollar Four Hundred Eighty Three Million and Two hundred Fourteen Thousand and Eight Hundred Fifty Seven (USD483,214,857.00). For information on the financial performance of Scatec Solar ASA, please refer to Scatec Solar ASA’s annual reports for 2013, 2014, 2015 and 2016 available on Scatec Solar ASA’s website: www.scatecsolar.com/investor. [The rest of this page has been intentionally left blank] 111
  121. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Section 7 Information on the Projects 7.1 The Projects The Projects to be undertaken by the Project Companies involve the financing, design, engineering, procurement, construction, installation, testing, commissioning, ownership, operation and maintenance of the Plants, the Site, the Meteorological Measuring Facilities, the SPP Interconnection Facility, the SPP Interconnector, the SPP Works and associated facilities. 7.2 Technical Description 7.2.1 Site and Layout Gurun, Kedah The Site for the Plant in Gurun, Kedah is located on the parcels of land held under HSD 741 to 748, HSD 757 to 759, HSD 760 to 769 and HSD 770 to 775 at Mukim Ayer Puteh, Daerah Pendang, Kedah (“Kedah Land”) and is approximately thirty (30) kilometres (“km”) to the south of Alor Setar, Kedah and approximately eighty five (85) km to the north of Seberang Perai, Pulau Pinang. The total land area involved for the development of the Plant in Gurun, Kedah is approximately one hundred and eighty three (183) acres. The category of the land use of the Kedah Land is for agriculture. The Kedah Land is a Malay reserve land. Please see Appendix 3 for an overview of the Kedah Site and Appendix 4 for the Site plan of the Kedah Site. Jasin, Melaka The Site for the Plant in Jasin, Melaka is located on the parcels of land held under HSD 6095, PN 56586, PN 31611, PN 31610 and PN 31609 at Mukim Ayer Panas, Daerah Jasin, Melaka (“Melaka Land”) and is approximately fifteen (15) km to the North East of Melaka. The total land area involved for the development of the Plant in Jasin, Melaka is approximately two hundred and seven (207) acres. The category of the land use of the Melaka Land is for building. Please see Appendix 5 for an overview of the Melaka Site and Appendix 6 for the Site plan of the Melaka Site. [The rest of this page has been intentionally left blank] 112
  122. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Merchang, Terengganu The Site for the Plant in Merchang, Terengganu is located on the land at Paya Tok Asing, Mukim Merchang, Daerah Marang, Terengganu (“Terengganu Land”) and is approximately forty seven (47) km to the south of Kuala Terengganu, Terengganu. The total land area involved for the development of the Plant in Merchang, Terengganu is approximately two hundred (200) acres. Please see Appendix 7 for an overview of the Terengganu Site and Appendix 8 for the Site plan of the Terengganu Site. As at the date of this Information Memorandum, the document of title in respect of the Terengganu Land has not been issued. 7.2.2 Plant Process and Technology The Plants will use ‘Duomax monocrystalline’ modules from Trina Solar Ltd (“Trina Solar”). Trina Solar was founded in 1997, and is one of the leading global photovoltaic (“PV”) manufacturers and is headquartered in Changzhou, China. Trina Solar has a total accumulated shipment of more than 21 Gigawatt (“GW”) with a manufacturing capacity of 5GW per year. Trina Solar was placed third (3rd) as a Tier 1 PV module manufacturer ranked by Bloomberg New Energy Finance in the fourth (4th) quarter of 2016. Examples of projects using the ‘Duomax’ product series includes the 50MW Yunnan project in China (from 2015), the 50MW Xinyi project in China (from 2016) and the 100 MW Clare Solar Farm project in Australia (from 2017). The inverters will be provided by Green Power Technologies S.L. (“GPTech”), a well-known inverter producer and developer in the international markets with an extensive track record. GPTech’s inverters have been widely installed across several projects worldwide. Examples of projects using the ‘1500V GPTech inverter’ includes the 27 MW Kayenta solar PV power plant in Arizona, U.S. from 2016. High voltage transformers will be provided by Crompton Greaves Limited (“CGL”). CGL has delivered transformers into Malaysia with an accumulated capacity of more than 16,000 mega volt ampere (“MVA”) in the past twenty (20) years, of which includes several projects with TNB. In addition to the above, other major equipment providers include, amongst others, PVHardware (mounting racks) and Prediktor AS (monitoring system), all of which are experienced players in the market. [The rest of this page has been intentionally left blank] 113
  123. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum The figure below shows a simplified diagram of a solar power plant setup along with the functions of the main equipments. MV/HV Transformers Below is a brief description of the functions of each of the main equipment:  Overall Design : A solar power plant's key components are modular, and any issues with the key components can easily be replaced with on-site spares. The modular design also minimises operational risks as the entire plant does not need to be shut down for maintenance or part replacement.  Solar PV modules: The solar PV cell convert solar radiation directly into electricity through the photovoltaic effect. Electricity is generated in a silent and clean process that requires no moving parts. The solar power plant's key components are modular and easily replaceable without shutting down the plant. The output from a solar PV cell is direct current (“DC”) electricity. There are seventy two (72) cells connected together in each module from Trina Solar and thirty (30) modules connected together in each string with a total number of up to thirty two (32) strings per string combiner box, to produce the required DC power output. In the event there is a default with one of the strings, only that particular string will be affected and such default will not have any impact on the other strings connected with the string combiner box. There are fourteen (14) string combiner boxes for each inverter. Satellite derived data is typically used to assess the solar irradiance resource and is often compared against ground-based measurement systems in similar locations. 114
  124. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 7.2.3  Mounting racks: The mounting racks allow the solar PV modules to be securely attached to the ground at a fixed tilt angle.  Inverters: The inverters are required to convert the DC electricity to alternating current (“AC”) for connection to the utility grid. Each string of PV modules is connected to an inverter. There are sixteen (16) inverters altogether for each Plant.  Step-up transformers: The output from the inverters generally requires a further step-up in voltage to reach the AC grid voltage level. The step-up transformer takes the output from the inverters to the required grid voltage (for example 132kV), depending on the grid connection point.  The grid connection interface: This is where the electricity is exported into the grid network. The substation will also have the required grid interface switchgear such as circuit breakers (CBs) and disconnects for protection and isolation of the PV power plant, as well as metering equipment. The substation and metering point are often external of the PV power plant boundary and are typically located on the transmission network operator’s property. Construction Timeline The construction of the Plants is undertaken by the EPC Contractor on a fixed price lump sum turnkey basis to achieve the Initial Operation Date, the date of which shall occur no earlier than 30 June 2017 and the Scheduled Commercial Operation Date on 31 December 2017. Each of the Project Companies has issued a notice to proceed under the EPC Contracts on 28 February 2017. As at the date of this Information Memorandum, the following works have commenced on each of the Plants: 7.3  Site vegetation clearance  Earthworks Licensing Requirement Under the Electricity Supply Act, a person who intends to operate a power plant is required to hold an electricity generation licence. Licences may be granted by the Commission with the approval of the Minister upon payment of such fees and upon such conditions as appear to be requisite or expedient having regard to the function and duties of the Commission, established under the Energy Commission Act 2001. The requirement to procure the Generation Licence is a condition precedent to the commencement of generation of electricity under each of the PPAs. Accordingly, each of the Project Companies shall provide a certified true copy of the Generation Licence issued to them by the Commission to TNB prior to the Initial Operation Date 115
  125. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum and such certified true copy of the Generation Licence shall also be provided to the Security Agent and the Sukuk Trustee respectively. The Electricity Supply Act further provides that a term of a generation licence shall not without the express approval of the Minister (for the time being charged with the responsibility for matters relating to the supply of electricity) be for a period exceeding twenty one (21) years. As at the date of this Information Memorandum, each of the Project Companies do not hold an electricity generation licence as application is only required to be made three (3) months prior to the Initial Operation Date of each of the Plants. 7.4 Project Economics 7.4.1 Base Case Cashflow Projections The information and assumptions contained in a detailed financial model (“Base Case Cashflow Projections”) represent the current and anticipated contractual terms between the Issuer, the Project Companies and the relevant parties as well as other assumptions on the operating parameters of the Plants and financial parameters of the Projects, made as of the date of this Information Memorandum. The Base Case Cashflow Projections and certain statements herein are forwardlooking and illustrative only. The calculations are based on certain assumptions which may not be realised. In addition, the forward-looking statements involve a number of risks and uncertainties. Each recipient should carefully conduct an independent evaluation of the Base Case Cashflow Projections and associated due diligence to determine the viability of the assumptions summarised in Appendix 2 of this Information Memorandum. As the Projects are still under development, these parameters are expected to change or be revised from time to time in the future. An extract of the Base Case Cashflow Projections is attached as Appendix 1 of this Information Memorandum. The assumptions of the Base Case Cashflow Projections are summarised in Appendix 2 of this Information Memorandum. 7.4.2 Projects’ Capital Structure The Projects’ capital structure will comprise of debt (the Green SRI Sukuk, the PB Facility and subordinated shareholder financings provided to the Issuer) and equity. The timing in relation to uses of funds is derived from assumptions as to when payments under the Project Documents and other Projects’ expenditures are expected to occur. Debt Green SRI Sukuk The proceeds from the Green SRI Sukuk will, amongst others, be advanced by the Issuer to the Project Companies pursuant to the Interco Financing Documents. The 116
  126. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum payment terms of the Project Companies under the Interco Financing Documents are to be similar to the payment terms of the Issuer under the Green SRI Sukuk. The PPAs allow the Issuer or the respective Project Companies to raise financing for the respective Projects. PB Facility There will also be a performance bond facility of up to Ringgit Twenty Seven Million (RM27,000,000.00), which shall include overdraft, letter of guarantee, letter of credit, trust receipt and other working capital facilities to be granted to the Issuer in connection with the Project Companies’ obligations under the PPAs. Subordinated Shareholder Financings The Projects may also be financed by subordinated shareholder financings provided to the Issuer. Equity The Shareholder and the Equity Provider will enter into the Equity Contribution Agreement to undertake to provide capital contribution to the Issuer. A breach of the Shareholder’s and/or the Equity Provider’s obligations under the Equity Contribution Agreement would result in an EOD under the Green SRI Sukuk. Initial Equity Injection and Total Equity The Shareholder and/or the Equity Provider shall, on or before the Equity Trigger Date (as defined below), inject into the Issuer Equity Account (as set out in the section entitled “Details of designated accounts, if applicable” of the PTC) equity injections and/or subordinated financings or advances (“Total Equity”) for an amount equivalent to at least twenty per cent (20%) of the Project Total Cost (“Equity Amount”), except for the proceeds of the initial equity injection which has been applied for payments made under the first tranche of the project development fees referred to under the respective Project Development Agreements as confirmed under the confirmation provided for purposes of compliance of conditions precedent to the issuance of the Green SRI Sukuk (“Initial Equity Injection”). For the avoidance of doubt, the entire Equity Amount shall be deposited into the Issuer Equity Account no later than the Equity Trigger Date, failing which, the Equity BG (as defined below) will be called upon to make good the Equity Amount. The Total Equity (except for the Initial Equity Injection) to be contributed by the Shareholder and/or the Equity Provider shall be backed by a bank guarantee or its equivalent procured by the Equity Provider, in form and substance satisfactory to the Security Agent issued by a Qualifying BG Bank (“Equity BG”), in accordance with the Equity Contribution Agreement. The amount of the Equity BG can be reduced from to time by an amount equivalent to the Total Equity which have been made into the Issuer Equity Account and upon the Security Agent certifying in accordance with the Equity Contribution Agreement that such Total Equity amount has been made into the Issuer Equity Account and that the Issuer has utilised such Total Equity amount to provide capital contribution into the relevant Project Company via subscription of RPS and/or ordinary shares issued by the relevant Project Company to the Issuer. 117
  127. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum “Equity Trigger Date” means such date when any of the Project Companies have paid ninety per cent (90%) of the costs and expenses payable under the relevant EPC Contact or the balance in any of the Project Co CA (as set out in the section entitled “Details of designated accounts, if applicable” of the PTC) falls to Ringgit Ten Million (RM10,000,000.00), whichever is the earlier. Contingency Equity In addition, the Shareholder and the Equity Provider will provide an undertaking to the Security Agent to provide equity injections and/or subordinated financings or advances in the event of a cost overrun or any other costs and expenses in respect of the Projects (which includes any amount required to pay for any profit payments under the Interco Financing Documents up to the Commercial Operation Date of the relevant Plant) of up to Ringgit Fifty Million (RM50,000,000.00) in aggregate, in accordance with the Equity Contribution Agreement (“Contingency Equity”). The Contingency Equity will be backed by a bank guarantee or its equivalent in form and substance satisfactory to the Security Agent issued by a Qualifying BG Bank (“Contingency BG”). The amount of the Contingency BG can be reduced from to time by an amount equivalent to the Contingency Equity which have been made into the Issuer Equity Account as and when required to meet the Project Total Cost (including but not limited to, cost overrun or any other costs and expenses in respect of the Projects) and upon the Security Agent certifying in accordance with the Equity Contribution Agreement that such Contingency Equity amount has been received in accordance with the Equity Contribution Agreement and that the Issuer has utilised such Contingency Equity amount to provide capital contribution into the relevant Project Company via subscription of RPS and/or ordinary shares issued by the relevant Project Company to the Issuer. RCPS and/or RPS The Shareholder has legal and beneficial title to the entire ordinary share capital of the Issuer and the Equity Provider has agreed to invest in the Projects by subscribing to the RCPS to be issued by the Issuer pursuant to the RCPS Subscription Agreement and/or RPS to be issued by the Shareholder pursuant to the RPS Subscription Agreement. The proceeds of such subscription shall be deposited into the Issuer Equity Account. BNM’s approval has been obtained on 21 December 2016 in relation to the Scatec Solar ASA’s subscription of the RCPS to be issued by the Issuer and/or RPS to be issued by the Shareholder. As at the date of this Information Memorandum, an application has been submitted to BNM to, inter alia, extend the validity period of the BNM’s approval dated 21 December 2016 and for the approval to be revised for the RCPS and/or RPS to be subscribed by the Equity Provider instead. The proceeds in the Issuer Equity Account shall be used by the Issuer to subscribe for each of the Project Companies’ RPS pursuant to the Project Company RPS Subscription Agreements and/or ordinary shares as follows: a) on or before the Equity Trigger Date; and b) on any relevant date to cover cost overrun or any other costs and expenses in respect of any of the Projects (which includes any amount required to pay for any profit payments under the Interco Financing Documents up to the Commercial Operation Date of the relevant Plant). 118
  128. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum A summary of the sources and uses of funds for the Projects are attached in Appendix 1 of this Information Memorandum. 7.4.3 Project Insurance The Project Companies will be procuring a Comprehensive Project Insurance (“CPI”) policy with Hong Leong MSIG Takaful Sdn Bhd. The CPI insurance policy will cover the construction phase until the Commercial Operation Date or the date of hand over, whichever occurs first. The period also cover thirty (30) days of the testing and commissioning period. The period is extended with twelve (12) months’ of maintenance period to cover loss or damage during the maintenance work carried out by the EPC Contractor. The CPI insurance policy combined all key policies typically taken up during construction phase under one single policy: (i) (ii) (iii) (iv) (v) Project Works Third Party Liability Delay In Start Up Marine Cargo Marine Consequential Loss (i) Project Works The coverage under ‘Project Works’ provides cover for any sudden and unforeseen physical loss of or damage due to any cause to the Projects unless specifically excluded. The property insured under ‘Project Works’ includes all permanent and temporary works and any part thereof constructed, erected or tested in the performance of the project including any free issue materials. The coverage is also extended to include loss or damage to project works in consequence from wear and tear, corrosion, oxidation or deterioration of property insured. The sum insured under ‘Project Works’ is based on the estimated contract work amounting to RM344,220,111.00 for Gurun, RM342,316,430.00 for Jasin and RM354,972,894.00 for Merchang. (ii) Third Party Liability The coverage under “Third Party Liability” provides cover for any sums that the Project Companies shall become legally liable to pay as damages as a result of:  accidental death of or bodily injury to or illness of third party(ies); or  accidental loss of or damage to property belonging to third party(ies), 119
  129. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum caused by negligence of the Project Companies and the EPC Contractor during the course of construction of the Projects. The sums include all costs and expenses of litigation recovered from the Project Companies by the third party and other costs subject to the insurer’s consent. The limit of liability is at RM11,250,000.00. The limit will be on a per occurrence basis and unlimited throughout the construction period. (iii) Delay In Start Up The ‘Delay In Start Up’ covers reduction in turnover as a result of loss of or damage to the Projects’ works indemnifiable under ‘Project Works’ of the policy. Coverage is provided up to a maximum of twelve (12) months’ indemnity period. It is also extended to cover any increase cost of working resulting from a reduction in turnover insured under ‘Delay In Start Up’. The insured value under ‘Delay In Start Up’ for each of the Projects is as follows: (iv)  Gurun – RM49,180,959.00  Jasin – RM45,833,894.00  Merchang – RM49,753,147.00 Marine Cargo The coverage under ‘Marine Cargo’ includes loss of or damage to equipment of materials during shipment or carriage from the supplier’s premise to the Projects’ site. The coverage is based on Institute Cargo Clause (A) 1/1/09 which is essentially an ‘all-risks’ cover. The ‘Marine Cargo’ cover will provide costs to repair or replace the damaged items at any one conveyance and vessel based on the shipment value. The limit of cover per shipment or transit is at RM18,000,000.00. (v) Marine Consequential Loss The coverage under ‘Marine Consequential Loss’ operates under a similar premise as a delay in start-up cover caused by loss or damage to cargo whilst being ship or in transit. Coverage is extended with a ‘Full Marine Consequential Loss’ cover which encompasses delay caused by damage to vessels and general average. The insured value under ‘Marine Consequential Loss’ for each of the Projects is as follows:  Gurun – RM 49,180,959.00  Jasin – RM 45,833,894.00  Merchang – RM 49,753,147.00 120
  130. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 7.5 Project Structure The Projects will be implemented utilising a structure based on the key contractual relationships between the parties involved in the Projects shown below: The Project Companies have each entered into the following Project Documents: (a) (b) (c) (d) (e) (f) (g) (h) (i) PPA; EPC Contract; O&M Agreement; Project Land Lease Agreement; Asset Management Agreement; Asset Management Agreement (Issuer and Project Co); Project Development Agreement; Project Development Agreement Letters; and Project Management Agreement. The Issuer has entered into the following Project Documents: (a) (b) (c) (d) Asset Management Agreement (Issuer); Asset Management Agreement (Issuer and Project Co); Project Development Agreement Letters; and Project Management Agreement (Issuer). The Project Companies and the Issuer will each provide a first ranking assignment and charge over their rights, interests, titles and benefits under the Project Documents to which it is a party and the proceeds therefrom (but excluding the Generation Licences) in favour of the Security Agent for the benefit of the Sukukholders. [The rest of this page has been intentionally left blank] 121
  131. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 7.6 Summary of Key Project Documents 7.6.1 Power Purchase Agreements In respect of defined terms in this Section 7.6.1 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the PPAs. The terms of the PPAs in respect of each of the Plants are substantially similar and references to “PPA” in this Section 7.6.1 shall refer to each of the PPAs, unless otherwise highlighted in this Information Memorandum. Overview The Project Companies have entered into the PPAs with TNB on 3 November 2016. The PPAs set out the terms and conditions governing the sale and delivery of electricity and generating capacity from the Plants by the Project Companies to TNB and the purchase by TNB of such electricity and generating capacity from the Project Companies. The Project Companies shall design, construct, own, operate and maintain the Plants in accordance with the terms and conditions of the PPAs. Term The PPA takes effect on 8 May 2017 and expires on the day before the twenty first (21st) anniversary of the Commercial Operation Date (including such day) and unless otherwise extended or terminated in accordance with the terms and conditions of the PPA. Conditions Precedent to the Initial Operations The Initial Operation Date and the right of the Project Company to commence generation of solar photovoltaic energy at the Plant and to supply, deliver and sell Test Energy shall only occur upon satisfaction or waiver by TNB of the following conditions, namely that: (a) each of the Project Documents (other than the PPA) is in full force and effect and all conditions precedent to their effectiveness (except for conditions relating to the PPA) are satisfied or waived thereunder; (b) the Initial Financing Documents are in full force and effect and all conditions precedent to their effectiveness have been satisfied or waived thereunder; (c) the Project Company has submitted to TNB, with a copy to the Commission, the conceptual design report of the Plant, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works accompanied by a certificate from the Independent Engineer; (d) the Project Company has submitted to TNB, with a copy to the Commission, one (1) certified copy of each of the Initial Financing Documents, any Intercompany Financing Documents and the Project Documents (other than the PPA and the Site Agreement); 122
  132. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (e) the Project Company has submitted to TNB (i) a certified copy of the Generation Licence and (ii) a copy of the approved final power system study report conducted on the Project based on comprehensive models provided by the manufacturer of the solar photovoltaic energy panels and other components which will be used in the Plant (the Stage 2 Power System Study Report) as approved by TNB in writing; (f) the Project Company has submitted to TNB, with a copy to the Commission, a certificate from the Independent Engineer that the SPP Works have been designed, manufactured, supplied, constructed, installed and tested, and are ready for energisation and commissioning in accordance with the requirements of the PPA; (g) the performance security as set out in the PPA has been delivered to TNB and is in full force and effect; (h) the Project Company has submitted to TNB, with a copy to the Commission, a certified copy of the EIA Approval (if the Department of Environment requires the submission of an Environmental Impact Assessment Report by the Project Company); or (ii) a written confirmation from the Department of Environment that the EIA Approval is not required; (i) the commissioning and testing programs as set out in the PPA have been submitted by the Project Company to TNB, with a copy to the Commission, and approved by TNB which approval shall not be unreasonably withheld or delayed; and (j) the test procedures as set out in the PPA has been submitted by the Project Company to TNB, and approved by TNB which approval shall not be unreasonably withheld or delayed. Conditions Precedent to Commercial Operations The Commercial Operation Date and the right of the Project Company to supply, deliver and sell net electrical output and the obligation of TNB to accept and to purchase net electrical output from the Plant or to make Energy Payments to the Project Company shall not occur until the following conditions have been satisfied: (a) the Project Company has submitted to TNB a copy of the “Commissioning Test Certificate” or similar document to the like effect issued by the Commission as contemplated by the Generation Licence in respect of the Plant being operational; (b) the Project Company has submitted to TNB, with a copy to the Commission, the final design of the Plant and a certificate from the Independent Engineer stating that the Plant, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works have been tested and commissioned in accordance with the tests contained in the PPA and the EPC Contract; (c) the Project Company has submitted to TNB, with a copy to the Commission, a certificate from the Independent Engineer confirming that the Plant has the capacity and capability to meet the declared capacity of the Plant and the test results which show that the Project Company can meet the declared capacity of the Plant as certified by the Independent Engineer; 123
  133. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (d) the Project Company has submitted to TNB a written confirmation from the Commission that the value engineering analysis as described under the PPA has been conducted to the satisfaction of the Commission; (e) no default by the Project Company and/or the Issuer of: (i) any material provision of the PPA; or (ii) any provision of the Financing Documents whereby the breach could reasonably be expected to have a material adverse effect on the ability of the Project Company to perform its obligations or availability of the rights of TNB under the PPA, shall have occurred and be continuing; (f) the representations and warranties by the Project Company in the PPA are true and correct in all material respects as if made on the Commercial Operation Date; and (g) all the documentation, data, information and certified test results set out in the PPA have been submitted by the Project Company to TNB, with a copy to the Commission, and verified by TNB as being in conformance with the requirements of the PPA. Critical Milestones Critical milestones in the PPA are as below: (a) the Financial Closing Date shall occur on or before 1 November 2017. The “Financial Closing Date” means the date on which the Financing Documents relating to the financing or refinancing for the total construction costs of the Project have been entered into by the Project Company or the Issuer with the Financing Parties, and all of the conditions precedent for the initial drawdown under such Financing Documents have been satisfied by the Project Company and/or the Issuer or waived by the Financing Parties thereunder; (b) the Commencement Date (means the date notified by the Project Company to TNB on which the notice to proceed under the EPC Contract is issued) shall occur no later than 1 March 2017; (c) each of the Project Documents shall be in full force and effect and all conditions precedent to their effectiveness shall be satisfied or waived no later than 30 September 2017; and (d) the Initial Operation Date shall occur no earlier than 30 June 2017. Notwithstanding the above, the failure to meet any of the critical milestones set out above does not in itself amount to an Event of Default by the Project Company under the PPA. [The rest of this page has been intentionally left blank] 124
  134. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Sale and Purchase Obligations From the Initial Operation Date until the Commercial Operation Date, TNB shall accept all Test Energy and pay the Project Company for such Test Energy in accordance with the PPA. From the Commercial Operation Date and continuing throughout the Term: (a) the Project Company shall deliver and sell to TNB, and TNB shall accept and purchase the net electrical output which is generated by the Plant; and (b) TNB shall pay the Project Company for such net electrical output in accordance with the PPA. TNB is not obliged to accept net electrical output from the Plant: (i) if the Plant delivers to TNB net electrical output which does not conform to the electrical characteristics set forth in the PPA; (ii) if an Emergency Condition occurs within the Grid System and/or any constraint or interruption in the Grid System as a result of which the Grid System is unable to accept net electrical output from the Plant which may result in the Grid System Operator disconnecting the Plant from the Grid System and/or issuing a Despatch Instruction for the Project Company to reduce generation from the Plant provided such period shall in aggregate not exceed one hundred and sixty eight (168) hours in each Contract Year; (iii) if TNB interrupts the acceptance of solar photovoltaic energy from the Plant to conduct necessary maintenance of the TNB Metering Equipment or the Grid System, provided such maintenance shall not exceed, (1) forty two (42) hours in aggregate in each Contract Year for any maintenance to be carried out from 10.00 a.m. to 4.00 p.m.; and (2) one hundred and twenty six (126) hours in aggregate in each Contract Year for any maintenance to be carried out from 4.01 p.m. to 9.59 a.m.; (iv) if the Plant deliver to TNB net electrical output which is not solely driven by solar photovoltaic technology or the Plant and/or the Project comprises energy storage devices; (v) if the Plant has delivered to TNB net electrical output in a Contract Year which exceed the Maximum Annual Allowable Quantity of such Contract Year; or (vi) if the net electrical output delivered by the Plant over any half (1/2) hour period exceeds the Established Capacity other than instances of unusually high solar irradiance. Purchase Price and Other Charges TNB agrees to pay to the Project Company the following charges: (a) Test Energy Payment – starting from the Initial Operation Date until the day immediately before the Commercial Operation Date; and 125
  135. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (b) Energy Payments – starting from the Commercial Operation Date and subject to the Despatch Instruction (where applicable, in accordance with the PPA); All Test Energy Payment and Energy Payments shall be in Ringgit and the amounts are calculated in accordance with the PPA. Billing and Payment A Billing Statement is to be issued monthly by the Project Company starting from the Initial Operation Date. TNB shall within thirty (30) days of receipt of the Billing Statement pay in full to the Project Company, the Test Energy Payment, the Energy Payment and/or the Non-Acceptance Payment (if any) invoiced in such Billing Statement (but less any amount due to TNB from the Project Company (including but not limited to the Non-Delivery Payment) and less any amount in the Billing Statement disputed by TNB in good faith which is to be settled under the PPA). Late payment will be subject to a default rate (being one per cent (1%) above the base rate then in effect at the principal office of Malaysian Banking Berhad (or its successor-in-title)). No Set-Off Except as otherwise provided in the PPA, all payments by either party to the other party under the PPA shall be made free of any restriction or condition and without deduction on account of any amount claimed from the other party which is disputed in good faith by that party. Adjustment of Energy Rate TNB and the Commission shall be entitled to amend the initial financial model, or the then prevailing updated input financial model, pursuant to the agreement on or determination of inputs, to determine and reduce the Energy Rate on the occurrence of each the following events: (i) the Commercial Operation Date; (ii) in the event of a failure by the Project Company to deliver input data within the stipulated time frame or comply with its obligations and/or warranties under the relevant provisions under the PPA; (iii) one (1) year after the Commercial Operation Date. Upon determination of the Energy Rate by the updated input financial model by TNB and the Commission, the Energy Rate shall be adjusted downwards to reflect such determination with effect from the month following the determination. If: (a) the construction and financing costs of the Project is reduced below the amounts appearing in the initial financial model or the then existing updated input financial model, as the case may be, the Energy Rate shall be adjusted downwards to reflect fifty percent (50%) of the costs reductions. 126
  136. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (b) the Project Company received any incentive or benefit in respect of taxes and/or any tax allowance from any Government entity at any time from the date of the PPA up to one (1) year after the Scheduled Commercial Operation Date, TNB shall be entitled to reflect the whole of such incentive or benefit and/or tax allowance, when revising the Energy Rate. In the event of a failure by the Project Company to deliver input data within the stipulated time frame or comply with its obligations and/or warranties under the relevant provisions under the PPA, the initial financial model or the updated input financial model, as the case may be, shall be revised so that the Energy Rate shall be seventy five percent (75%) of the then prevailing Energy Rate. In the event any adjustment to the Energy Rate will have an impact on the ability of the Project Company to meet the Project Company's debt service payment, financial covenants appearing in the Financing Documents and/or the minimum finance service cover ratio appearing in the initial financial model or updated financial model to the extent relating to the Project, the parties agree such adjustment shall be deferred to such later date and at such rate as approved by the Commission so as to ensure that the debt service payment, financial covenants appearing in the Financing Documents and/or the minimum finance service cover ratio in the initial financial model or updated financial model to the extent relating to the Project remain unaffected while anchoring the project return assumed in the initial financial model or specified in any updated input financial model, as the case may be, which shall not exceed nine per cent (9%) provided always that any such downward adjustment to the Energy Rate shall not be deferred beyond the seventeenth (17th) anniversary of the Commercial Operation Date. For the avoidance of doubt, any impact on the financial covenants and/or minimum finance cover ratio shall be examined on the Project only as appearing in the initial financial model or updated financial model, and not at the Issuer’s level. Adjustments for Inaccurate Meters In the event the TNB Metering Equipment fails to register, or if the measurement made by the TNB Metering Equipment is found upon testing to be inaccurate by more than +/-1%, an adjustment shall be made correcting all measurements of the inaccurate or defective metering device for billing purposes for both the amount of the inaccuracy and the period of the inaccuracy in the manner as set out in the PPA. Delay Compensation The Project Company agrees to pay TNB by way of pre-ascertained and agreed compensation the following: (a) if, due to the default of the Project Company or its contractors or agents under the PPA, the Commercial Operation Date does not occur on or before the Scheduled Commercial Operation Date, the Project Company shall compensate TNB an amount equal to Ringgit Fifty Thousand (RM50,000.00) per day for each day following the Scheduled Commercial Operation Date until the earlier of (i) the Commercial Operation Date; (ii) the date on which the PPA is terminated by TNB in accordance with the provisions of the PPA; and (iii) one hundred and eighty (180) days after the Scheduled Commercial Operation Date; and 127
  137. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (b) if the Project Company abandons the Project after the Effective Date, the Project Company shall forthwith compensate TNB an amount equal to Ringgit Nine Million (RM9,000,000.00). Abandonment during the construction period occurs if the Project Company fails to perform any material part of the construction works and the Independent Engineer is unable to confirm that there is a reasonable prospect of the Project Company achieving the Commercial Operation Date by 30 June 2018. Abandonment occurs after the Commercial Operation Date if the Project Company fails to operate the Plant for a continuous period of more than six (6) months unless (1) TNB is in breach of a material obligation under the PPA; or (2) the Plant was during such period the subject of repair, rehabilitation or repowering; or (3) the Project Company is excused from doing so pursuant to a Force Majeure Event in accordance with the PPA or as a result of the occurrence of an event of the type contemplated in the relevant provisions under the PPA (i) where an Emergency Condition occurs within the Grid System as a result of which the Grid System is unable to accept net electrical output from the Plant or (ii) where TNB interrupts the acceptance of solar photovoltaic energy from the Plant to conduct necessary maintenance of the TNB Metering Equipment or the Grid System. For the avoidance of doubt, the aggregate of compensation described in paragraphs (a) and (b) above that are payable by the Project Company shall not exceed Ringgit Nine Million (RM9,000,000.00). Performance Security The Project Company shall secure payment of the compensation described in paragraphs (a) and (b) above by providing to TNB, not later than the earlier of (i) seven (7) days from the Financial Closing Date; and (ii) two hundred and ten (210) days after the Effective Date, an irrevocable bank guarantee issued by a commercial bank reasonably acceptable to TNB in an amount equal to Ringgit Nine Million (RM9,000,000.00). This bank guarantee shall permit drawings by TNB to satisfy the performance obligations of the Project Company for the compensation described in paragraphs (a) and (b) above. The bank guarantee is to remain valid until expiration of one hundred and ninety (190) days after the Scheduled Commercial Operation Date. If the Project Company fails to provide the bank guarantee to TNB within this time frame (or such other date as may be agreed between the parties) and valid for the duration set forth above, TNB may terminate the PPA by giving notice to the Project Company. Plant, SPP Interconnection Facility, SPP Interconnector and the SPP Works The Project Company shall design, engineer, procure, construct, install, energise, test and commission the Plant, the SPP Interconnection Facilitiy and the SPP Interconnector in accordance with Prudent Utility Practices and the terms and conditions of the PPA. The Project Company shall design, engineer, procure, construct, install, energise, test and commission the SPP Works in accordance with the TNB Technical Specifications and the terms and conditions of the PPA. 128
  138. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Plant’s 132kV Transformer(s), SPP Interconnection Facility, the SPP Interconnector and the SPP Works Protection Scheme, Relay Type and Settings The Project Company shall provide TNB with copies of any periodic reports provided by the EPC Contractor to the Project Company and any periodic reports provided to the Financing Parties describing the progress of construction of the Plant, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works. In addition to providing TNB with copies of periodic reports provided to the Financing Parties, the Project Company shall also simultaneously furnish TNB with a work programme relating to the Plant, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works specifying the sequence in which the Project Company proposes to construct, install, test and commission the Plant, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works. Back-up Electricity Supply Starting from the Commercial Operation Date, TNB may, upon the request of the Project Company, provide the Plant with with a supply of back-up electricity at a tariff on a sen/kWh basis to be reasonably determined by TNB pursuant to the Electricity Supply Act. Commencement of Initial Operation Date No generation of solar photovoltaic energy from the Plant in an interconnected mode with the Grid System, whether for testing purposes or otherwise, may take place and the Initial Operation Date may not occur until (i) acceptance by TNB of all the relay settings as installed by the Project Company, tested and certified by the Electrical Service Engineer and final relay settings printout with endorsement by the Electrical Service Engineer in relation to the Plant’s 132kV transformer(s), the SPP Interconnection Facility, SPP Interconnector and SPP Works, (ii) all protection relay settings in relation to the Plant have been installed by the Project Company, tested and certified by the Electrical Service Engineer; and (iii) the Grid System Operator has confirmed in writing, within a reasonable period, that the operation of the Plant with the Grid System may commence. Consequences of Delay by TNB If the Commercial Operation Date is delayed by: (i) the failure of TNB to inspect or endorse without reasonable cause the interconnection protective devices referred to in the PPA within fourteen (14) days of receipt by TNB of the certificate by the Independent Engineer issued in accordance with the PPA; (ii) the failure by TNB to accept the required generation to enable the testing of the Plant in accordance with the Agreed Program as may be adjusted in accordance with the Approved Commissioning and Testing Schedules; or (iii) a delay in the Initial Operation Date by the Grid System Operator for more than fifteen (15) days from the Initial Operation Date as proposed by the Project Company in accordance with the PPA (subject always to the Project Company satisfying all requirements under the PPA for the commencement of the Initial Operation Date) as a result of any constraint or interruption in the 129
  139. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Grid System including the Grid System Operator’s failure to issue the confirmation notice for the commencement of the energisation and commissioning of the SPP Works in accordance with the PPA, then the Scheduled Commercial Operation Date shall be extended by one (1) day for each day the Commercial Operation Date is delayed. The Project Company will be entitled to declare the Commercial Operation Date on the Scheduled Commercial Operation Date if it is able to meet the requirements of the PPA to make that declaration notwithstanding such delay caused by TNB. In the event the Commercial Operation Date fails to occur within thirty (30) days of the Scheduled Commercial Operation Date pursuant to the delay caused by TNB or the Grid System Operator as set out in (i), (ii) and (iii) above, then the Project Company shall be deemed to have achieved the Commercial Operation Date on the date which is thirty (30) days after the Scheduled Commercial Operation Date in which event TNB shall pay the Project Company the Deemed Delivery Payment for each day of delay starting from the date which is thirty (30) days after the Scheduled Commercial Operation Date subject to the following conditions: (i) the Project Company has notified TNB in writing that the Plant, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works have been designed, manufactured, supplied, constructed and installed in accordance with the requirements of the PPA and Prudent Utility Practices; (ii) the Project Company shall satisfy each of the conditions precedent to commercial operations as set out in the PPA no later than the Extended Date for Commissioning, failing which SPP shall forthwith refund the total Deemed Delivery Payment received; (iii) if, upon the actual commissioning of the Plant, the actual capacity of the Plant as certified by the Independent Engineer is less than the capacity assumed in the Maximum Annual Allowable Quantity used to calculate the payment, the Project Company shall forthwith refund the excess amount of Deemed Delivery Payment received re-calculated on the basis of the lower actual capacity and the deemed net electrical output delivered shall be adjusted accordingly; (iv) the aggregate payment for net electrical output, equivalent net electrical output and deemed net electrical output payable by TNB shall not exceed the Maximum Annual Allowable Quantity in the Contract Year; and (v) TNB shall be entitled to set off any amount due to TNB pursuant to this paragraph against any sums due and payable to the Project Company under the terms of the PPA. If, due to the failure of TNB to inspect or endorse without reasonable cause the interconnection protective devices within fourteen (14) days of receipt by TNB of the certificate by the Independent Engineer issued in accordance with the PPA, the Commercial Operation Date fails to occur within thirty (30) days of the Scheduled Commercial Operation Date, TNB shall pay the Project Company the (i) actual interest incurred by the Project Company and/or the Issuer during the construction of 130
  140. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum the Plant under the Financing Documents to the extent relating to the Projects as a result of the delay of the Commercial Operation Date, for the period from the date after the expiry of fourteen (14) days from receipt by TNB of the certificate by the Independent Engineer until the earlier of (A) the date TNB inspects or rejects with reasonable cause or approves the interconnection protective devices; or (B) the deemed Commercial Operation Date pursuant to the above paragraph, provided always that TNB shall not be liable to pay the interest as aforesaid if the Project Company fails to provide TNB with the details of such interest with the relevant supporting documents, and (ii) unavoidable costs (not including costs arising from any default due to the Project Company) that is substantiated by the Project Company with sufficient and appropriate evidence to the satisfaction of TNB. Commercial Operation Date The Project Company shall provide TNB with thirty (30) days’ prior notice of the proposed Commercial Operation Date. If the Commercial Operation Date does not occur on the proposed Commercial Operation Date, the Project Company shall notify TNB not less than two (2) Business Day’s prior notice of the new proposed Commercial Operation Date. The Project Company shall also notify TNB not less than one (1) Business Day's prior notice before the Commercial Operation Date actually occurs and until such notice is given, the Project Company shall be deemed not to have achieved the Commercial Operation Date. The Project Company shall furnish TNB with the Declared Annual Quantity for the Contract Year in which the Commercial Operation Date occurs (the “Initial Contract Year”) at least thirty (30) days prior to the proposed Commercial Operation Date, the Annual Generation Profile and the proposed schedule of planned outages. In addition to furnishing the Declared Annual Quantity for the Initial Contract Year, if the Commercial Operation Date occurs in any of the months of October, November and December, the Project Company shall also simultaneously furnish TNB with the Declared Annual Quantity, the Annual Generation Profile and the proposed and indicative schedules of planned outages for the Contract Year immediately following the Initial Contract Year. If the Project Company notifies TNB that the Commercial Operation Date can be achieved earlier than the Scheduled Commercial Operation Date, TNB may agree to an earlier Commercial Operation Date from which Energy Payments shall be payable in accordance with the PPA. Consequences of the Project Company’s Failure to meet the Established Capacity (a) If the test results of the performance tests conducted on the Plant to be submitted to TNB no later than the Commercial Operation Date, show that the declared capacity of the Plant as certified by the Independent Engineer is less than the Established Capacity, then the Established Capacity shall be revised downwards to reflect the actual capacity of the Plant as certified by the Independent Engineer. (b) In the event that the test results of the performance tests conducted on the Plant to be submitted to TNB thirty (30) days before the tenth (10th) anniversary of the Commercial Operation Date or such later date as may be 131
  141. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum notified by TNB to the Project Company in writing (the “Performance Test Date”) show that the capacity of the Plant as certified by the Independent Engineer is less than the Established Capacity, then the Established Capacity shall be revised downwards to reflect the actual capacity of the Plant as certified by the Independent Engineer. In the event of a failure by the Project Company to comply with the aforesaid obligations, the Established Capacity shall be revised downwards to be the lower of (i) seventy five percent (75%) of the then prevailing Established Capacity; and (ii) seventy five percent (75%) of the highest load of the Plant as measured by the TNB Metering Equipment during a period of thirty (30) days immediately preceding the Performance Test Date. The Established Capacity as revised in accordance with paragraphs (a) and (b) above shall be used for the purpose of (a) the determination of the Maximum Annual Allowable Quantity and the Declared Annual Quantity and (b) the calculation of the payments as described in the appendix in the PPA in respect of “Calculation of Energy Payment, Non-Acceptance Payment and Non-Delivery Payment”, for the remainder of the Term, unless revised in accordance with the PPA. Consequences of the Project Company’s Failure to Deliver Net Electrical Output If, otherwise than due to an Emergency Condition, an interruption due to a Force Majeure Event affecting the Project Company or any default of omission on the part of TNB, the total net electrical output delivered by the Plant in a Contract Year is less than seventy percent (70%) of the Declared Annual Quantity of such Contract Year, the Project Company shall pay TNB the Non-Delivery Payment in accordance with the PPA. SPP Interconnection Facility, SPP Interconnector and SPP Works SPP Works The Project Company shall design, construct, install and test the SPP Works at its expense in accordance with Prudent Utility Practices and the specifications set out in the PPA. The Project Company shall complete the construction, installation and testing of the SPP Works not later than thirty (30) days before the Initial Operation Date. The Project Company shall, at its cost and expense, acquire all rights and interest including all access rights relating to the parcels of land on which the SPP Interconnection Facility and the SPP Interconnector shall be constructed and located pursuant to the PPA. The Project Company shall, at its cost and expense, procure all necessary ownership rights, title and interest including the access rights to the land on which the SPP Works shall be constructed on. The Project Company shall transfer to TNB and take all actions necessary to effect the transfer of all rights, title and interest to the completed SPP Works, including the land on which the SPP Works are constructed and access rights thereto, free from encumbrances, on or before the Initial Operation Date so that TNB shall become the 132
  142. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum owner thereof. Upon such transfer, all property and title in such completed and transferred SPP Works shall pass to TNB. The Project Company warrants that the SPP Works shall be designed, constructed and installed in accordance with Prudent Utility Practices and the requirements and specifications set out in the PPA and free from defects in materials and workmanship. The obligation to correct any defects continues for twenty four (24) months from the date of transfer of the SPP Works to TNB. The period may be extended by an additional twenty four (24) months in respect of any repaired or replaced work. The Project Company also provides a warranty against latent engineering or design defects in the SPP Works for a period of sixty (60) months from the date of transfer. If, as a result of any defect in the SPP Works, the Grid System is unable to accept net electrical output from the Plant, the Project Company shall not be entitled to any Energy Payment and/or Non-Acceptance Payment during such period. Insurance The Project Company undertakes to TNB that it shall maintain or procure to be maintained in effect the following insurance policies and coverage with respect to the Plant and where applicable, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works: (a) all insurances required by law; (b) such insurance as is appropriate and customary for a prudent photovoltaic energy independent power producer; and (c) without prejudice to paragraph (b) above, all insurances as required under the Financing Documents. If any of the insurances referred to above are not available on reasonable commercial terms, the Project Company shall provide to TNB detailed information as to the maximum amount of available coverage that it is able to purchase and shall be required to obtain TNB’s consent (which consent shall not be unreasonably withheld or delayed) as to the adequacy of such coverage under the circumstances prevailing at the time. The Project Company shall apply the proceeds of any such insurance policies received following a claim by the Project Company for loss or damage to the Plant, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works in accordance with the requirements of the Financing Documents (so long as they are in effect) and otherwise to repair and/or reinstate the Plant, the SPP Interconnection Facility, the SPP Interconnector and the SPP Works. Force Majeure For the purposes of the PPA, a Force Majeure Event shall mean an event, condition, or circumstance or its effect which: (a) is beyond the reasonable control of and occurs without fault or negligence on the part of the party claiming it as a Force Majeure Event; and 133
  143. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (b) causes a delay or disruption in the performance of any obligation under the PPA despite all reasonable efforts of the party claiming it as a Force Majeure Event to prevent it or mitigate its effects. Subject to satisfying the foregoing criteria, Force Majeure Events include without limitation, the following: (i) strikes or lockouts and/or other work stoppages or industrial action (other than those solely affecting the party claiming the same as a Force Majeure Event); (ii) acts of public enemies or terrorists or acts of war, whether or not war is declared, acts of force by a foreign nation or embargo; (iii) public disorders, demonstrations; (iv) explosions, fire, earthquakes, landslides, subsidence, sabotage, and/or other natural calamities and acts of God; (v) unusually severe weather conditions; (vi) expropriation or compulsory acquisition by any Government entity; (vii) failure to obtain or renew any Government authorisations; and (viii) any force majeure event affecting the performance of any person that is a party to the EPC Contract or other contract between the Project Company and such person relating to the construction, operation or maintenance of the Plant or the construction and/or installation of the Plant, the SPP Interconnection Facilities, the SPP Interconnector and/or the construction of the SPP Works. insurrection, rebellion, sabotage, riots or violent Effect of Force Majeure Event and Consequences Subject to the limitations set out in the PPA, if either party is rendered unable by reason of a Force Majeure Event to perform any obligation under the PPA, then upon that party giving notice of Force Majeure, those obligations of that party shall be suspended or excused to the extent their performance is affected by the Force Majeure Event. The Scheduled Commercial Operation Date shall be extended by one (1) day for each day the Commercial Operation Date is delayed by a Force Majeure Event. The Term shall be extended by one (1) day for each day in the event that (i) the Plant is unavailable after its Commercial Operation Date due to any Force Majeure Event affecting that Plant, the SPP Interconnection Facilities, the SPP Interconnector; and (ii) the Project Company is not entitled under its insurance to receive insurance proceeds which replace any Energy Payments not received by the Project Company for such period. If a Force Majeure Event affecting the Project Company occurs before the Commercial Operation Date and delays the occurrence of the Commercial Operation Date past the Scheduled Commercial Operation Date, the Project Company shall not in any way be entitled to make any claims from TNB during the continuance of such 134
  144. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Force Majeure Event affecting the Project Company. The Scheduled Commercial Operation Date shall be extended by one (1) day for each day the Commercial Operation Date is delayed as a result of the occurrence of a Force Majeure Event affecting the Project Company. If a Force Majeure Event affecting TNB occurs before the Commercial Operation Date and delays the occurrence of the Commercial Operation Date past the Scheduled Commercial Operation Date, TNB shall pay the Project Company the costs of servicing debt (drawn down and expended by the Project Company in accordance with the terms of the Financing Documents) after the date such Force Majeure Event occurred (but not including the Sponsors' Gross Equity Contributions, the Sponsors' Equity Repayment or any cost relating thereto) and any unavoidable costs that the Project Company reasonably incurred during such duration to the extent the Project Company is not entitled under its insurances to receive insurance proceeds which reimburse it for such costs incurred, provided that the total liability of TNB in respect of any payment under this paragraph shall not in any event exceed Ringgit One Hundred and Thirty Six Thousand Seven Hundred and Sixty Seven and Sen Twelve (RM136,767.12) in respect of the Power Purchase Agreement (Kedah), Ringgit One Hundred and Thirty Eight Thousand One Hundred and Ninety One and Sen Seventy Eight (RM138,191.78)in respect of the Power Purchase Agreement (Terengganu) and Ringgit One Hundred and Twenty Six Thousand Seven Hundred and Ninety Four and Sen Fifty Two (RM126,794.52) in respect of the Power Purchase Agreement (Melaka) respectively, for each day during the continuance of the Force Majeure Event. If a Force Majeure Event affecting the Project Company occurs or continues after the Commercial Operation Date, TNB shall make Energy Payments to the Project Company only to the extent that solar photovoltaic energy is delivered in accordance with the PPA except if a Force Majeure Event affecting TNB occurs in which case the consequences described below will apply. If a Force Majeure Event affecting TNB occurs after the Commercial Operation Date and for the duration such Force Majeure Event persists, TNB shall continue to pay Non-Acceptance Payments to the Project Company only to the extent that the Plant is capable of generating and delivering solar photovoltaic energy in accordance with the PPA. Right to terminate under Force Majeure Either party may terminate the PPA if a Force Majeure Event prevents either party from substantially performing any material obligation under the PPA for a period which exceeds one hundred and eighty (180) days. While there is a right of termination as a result of a Force Majeure Event provided under the PPA, the right is only exercisable upon giving thirty (30) days’ written notice if a Force Majeure Event is preventing either party from substantially performing any material obligation under the PPA for a period exceeding one hundred and eighty (180) days, subject to the following: (a) if an Force Majeure Event cannot be remedied within one hundred and eighty (180) days with the use of reasonable diligence then the one hundred and eighty (180) days period shall be extended by a further period of one hundred and eighty (180) days; and 135
  145. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (b) if the party affected is unable to remedy the Force Majeure Event by the end of the further period of one hundred and eighty (180) days, then the parties shall consult as to what steps shall be taken with a view to mitigating or remedying the consequences of a Force Majeure Event. If the parties are unable to agree to extend the further period of one hundred and eighty (180) days, then either party may terminate the PPA by giving thirty (30) days’ written notice of termination. If the Commission exercises its statutory right to operate the Plant the provisions relating to a Force Majeure Event in the PPA shall continue to apply. TNB shall continue to make Energy Payments and/or Non-Acceptance Payments (if any) to the Project Company for net electrical output in accordance with the PPA to the extent that the Plant is capable of delivering solar photovoltaic energy and to the extent such payments to the Project Company are permitted by law. So long as consistent with the terms of the Financing Documents or the rights of the Financing Parties thereunder, any payment made by TNB to the Commission or at the Commission's direction pursuant to any applicable law shall for the purposes of the PPA be deemed to be a payment made to the Project Company in accordance with the terms of the PPA and to that extent in full discharge of TNB's obligation to the Project Company under the PPA. Events of Default, Walk Away Events and Termination Each of the following events shall constitute an Event of Default by the Project Company, unless excused under another provision of the PPA: (a) the Project Company fails to make a payment of any amount of a substantial nature which is due and payable under the PPA within sixty (60) days after receipt of notice of non-payment from TNB; (b) the Project Company fails to comply with or operate in conformity with any obligation of the PPA (other than a payment obligation) and such failure, if capable of remedy, continues uncured for a period of ninety (90) days, after receipt of notice of such failure from TNB; (c) the Project Company is dissolved or liquidated, other than for the purpose of a voluntary dissolution or liquidation as part of a reorganisation or reincorporation; (d) the Project Company applies for or consents to a receiver, manager, custodian, trustee or liquidator being appointed over or taking possession of all or a substantial part of its assets; (e) the Project Company admits in writing its inability to pay its debts as they fall due; (f) the Project Company makes a general assignment or an arrangement or composition with or for the benefit of its creditors; (g) the Project Company commences a voluntary case or files a petition seeking to take advantage of any law relating to bankruptcy, insolvency, reorganisation of its debts, winding-up or composition or readjustment of its debts; 136
  146. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (h) the Project Company fails to dispute in a timely manner, or acquiesces in writing to, any petition filed against it in an involuntary case under any bankruptcy or similar law; (i) the Project Company takes any action for the purpose of effecting any of the events described in paragraphs (c) through (g) above; (j) the Plant delivers to TNB net electrical output which is not solely driven by solar photovoltaic technology or the Plant and/or the Project comprises energy storage devices; (k) the Commercial Operation Date fails to occur within one hundred and eighty (180) days from the Scheduled Commercial Operation Date; (l) the Project Company abandons the Project after the Effective Date and fails to resume activities within a period of time agreeable to TNB; (m) the Site Agreement is terminated; (n) an event of default by the Issuer has occurred under the Financing Documents, if applicable; (o) any warranty, representation or covenant made by the Project Company in the PPA is false or inaccurate in any material respect; (p) the Generation Licence is suspended or revoked or terminated or expired due to the Project Company’s default, and the Project Company has not caused the Generation Licence to be reinstated or renewed either (i) within the shorter of three hundred and sixty-five (365) days and the legally permissible period for such reinstatement or renewal or (ii) after having exhausted all available administrative or legal appeals and applications for such reinstatement or renewal; or (q) any of the following events occur prior to the fifth (5th) anniversary of the Commercial Operation Date, without the prior written approval of the Commission and the Government: (i) save for any sale, conveyance, transfer or disposal of the Project pursuant to any Islamic financing accordance with the principles of Syariah and following which the Project Company re-acquires title to the Project, the Project Company sells, conveys, transfers or otherwise disposes of the Project or any material part or any interest in the Project to any other Person or enters into an agreement to do so; or (ii) any Shareholder sells, transfers or otherwise disposes of any share of the Project Company or QSP (including for this purpose the assignment of the beneficial interest therein the creation of any charge or other security interest over, such share or the renunciation or assignment of any right to receive or to subscribe for such share) or any interest in such share or enters into an agreement to do so; or (iii) there is a change in “Control of SPP”, 137
  147. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum and for the purposes of this paragraph (q): (aa) “interest in a share” shall have the meaning assigned to such phrase in Section 6A of the Companies Act 1965; (bb) “QSP” means Quantum Solar Park Malaysia Sdn. Bhd. (Company Registration No. 1177896-A); and (cc) “Shareholder” means a Person who, legally or beneficially, owns or Controls any share of the Project Company or QSP or any interest in such share. TNB’s Events of Default consist of: (a) non-payment of any amount of a substantial nature due and payable under the PPA within sixty (60) days of receipt of notice of non-payment from the Project Company, (b) breach of an obligation under the PPA (other than a payment obligation) which remains unremedied after ninety (90) days of receipt of notice from the Project Company, or (c) insolvency. If an Event of Default described above (other than that described in paragraphs (b) above that cannot be cured with the exercise of reasonable diligence within the period of ninety (90) days therein) occurs, the non-defaulting party may terminate the PPA by giving fourteen (14) days’ written notice to the other party. If the Event of Default described in paragraphs (b) above occurs and cannot be cured with the exercise of reasonable diligence within the period of ninety (90) days specified therein, the cure period shall be extended by a further one hundred and eighty (180) days and if the default continues uncured at the end of such further period, the nondefaulting party may terminate the PPA immediately by giving written notice to the defaulting party. In the event a Walk Away Event (as described below) is not satisfied by the Project Company by the relevant Walk Away Date, for whatever reason (including a Force Majeure Event), TNB shall, notwithstanding any provision to the contrary in the PPA, be entitled, at any time, to terminate the PPA by delivering to the Project Company a fourteen (14) days’ notice in writing. In the event of such termination, neither party shall have any obligation or liability (save for antecedent breach) to the other whether at law, under the PPA or otherwise and the rights of the parties under the PPA shall terminate and be of no force or effect. The Walk Away Events and the relevant Walk Away Dates are as follows: Occurrence of Financial Closing Date – 1 November 2017 Issuance of Notice to Proceed under the EPC Contract – 1 March 2017 Consequences of Termination Event of Default by the Project Company If TNB terminates the PPA as a result of an Event of Default by the Project Company, TNB shall have the option but not the obligation, exercisable by prior notice in writing within sixty (60) days of the termination of the PPA, to purchase the Project in the manner and for the purchase price determined in accordance with the provisions of the PPA. 138
  148. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Such purchase price is essentially an amount equal to: (i) the lesser of all amounts owing to all Financing Parties (excluding any amounts owing to the shareholders of the Project Company and their respective affiliates for the Sponsors Gross Equity Contribution) incurred under (a) the Initial Financing Documents or (b) any subsequent Financing Documents, including any reasonable costs and fees related to accelerated repayment and other financing termination costs, but excluding any costs and fees relating to the Sponsors Gross Equity Contribution (as defined below) as of the termination date (“Outstanding Indebtedness”), if the total capital contributed by shareholders of the Project Company and their affiliates (“Sponsors Gross Equity Contribution”), as certified by the auditor as at the date which is one year after the Commercial Operation Date, amounts to twenty per cent (20%) or more of the aggregate amount of the expenditure incurred and paid by the Project Company in connection with the Project (“Total Project Costs”) and ninety five per cent (95%) of the Outstanding Indebtedness if the Sponsors Gross Equity Contribution is less than twenty per cent (20%) of the Total Project Costs; plus (ii) the “A” Purchase Price as set out in the PPA, which is Ringgit Ten (RM10.00); plus (iii) all reasonable costs and expenses of the Project Company incurred or suffered as a result of the purchase of the Project by TNB, including any termination payments or novation fees on contracts in connection with the Project, all Taxes, any reasonable breakage costs and other reasonable and necessary termination costs, but excluding the Outstanding Indebtedness (“Transfer Costs”); less (iv) the aggregate of all cash balances at bank and in hand and liquid securities held by the Project Company and to be retained by the Project Company after the date of termination of the PPA (“Retained Sum”). Event of default by TNB If the Project Company terminates the PPA as a result of an Event of Default by TNB, the Project Company shall have the option but not the obligation, (exercisable by prior notice in writing within sixty (60) days of the termination of the PPA), to sell the Project to TNB, in the manner and for the purchase price determined in accordance with the PPA. In the event this option is exercised by the Project Company, TNB shall be required to purchase the Project from the Project Company. Such purchase price is essentially an amount equal to: If termination occurs pre-Commercial Operation Date, (a) the Outstanding Indebtedness; plus (b) the Sponsors Gross Equity Contribution; plus (c) the aggregate amount determined by applying the lower of (i) nine per cent (9%) and (ii) the Project returns as in the initial financial model, to each amount comprising the Sponsors Gross Equity Contribution from the date of 139
  149. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum injection of such amount to the date of termination of the PPA (“Interest on the Sponsors’ Gross Equity Contribution”); plus (d) the Transfer Costs; less (e) the Retained Sum. If termination occurs post-Commercial Operation Date, (a) the Outstanding Indebtedness; plus (b) the “B” Purchase Price, which is determined in accordance with the PPA and consists of equity contributions, plus a return on equity, less any dividends / equity repayments; plus (c) the Transfer Costs; less (d) the Retained Sum. Once payment in full has been made by TNB of the amount set out above, all the Project Company’s rights, title and interest in the Project and the Site (including the access rights) shall simultaneously be transferred by the Project Company to TNB (or its nominees) free from any encumbrance whatsoever. Where the Outstanding Indebtedness is payable by TNB above, it shall be paid by TNB directly to the Financing Parties (other than the shareholders of the Project Company and their respective Affiliates) whose receipt shall be a good discharge for TNB and the Outstanding Indebtedness shall thereby be deemed to have been paid to the Project Company. Payment of the Outstanding Indebtedness shall, where required by TNB, be in exchange for a transfer or assignment to TNB (or its nominees) of all rights, title and interests in the Initial Financing Documents (other than those in respect of the Sponsors Gross Equity Contribution), documented and evidenced to the satisfaction of TNB. Step-In Rights TNB TNB shall have the right, but under no circumstances the obligation to assume partial or complete (as TNB may decide) operational responsibility for the Plant (in the capacity of an operator only) in the place and instead of the Project Company in order to continue operation of the Plant or complete any necessary repairs so as to assure uninterrupted availability of solar photovoltaic energy from the Plant. Such step-in rights shall arise upon the occurrence and continuance of an Event of Default under the PPA with respect to the Project Company which could reasonably be expected to materially adversely affect the Project Company’s ability to operate and maintain the Plant in accordance with the PPA. TNB shall not exercise such step-in rights until any applicable cure period has expired, unless at any earlier time the Financing Parties (being the persons, in accordance with the Financing Documents, providing financing, hedging or other form of banking or bond facilities (including any refinancing in respect thereof) for the Project and includes any agent(s) or trustee under such banking or bond facilities) 140
  150. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum request TNB to step-in under any right that has arisen under the Financing Documents. For so long as the Financing Documents remain in effect, TNB shall not exercise step-in rights hereunder if the operation of the Plant has been assumed by any Financing Party or any approved assignee or designee within the applicable cure period. The Project Company’ shall ensure that the Financing Parties specifically acknowledge and are bound by such step-in rights of TNB. TNB shall have the right at any time, but not exceeding six (6) months from the time TNB exercises its step-in rights, to return the operational responsibility for the Plant to the Project Company, provided that TNB shall return the Plant to the Project Company in a condition no worse than that immediately prior to the assumption of the operational responsibility for the Plant by TNB, ordinary wear and tear excepted. The Commission So long as consistent with the terms of the Financing Documents or the rights of the Financing Parties thereunder, if the Commission exercises its statutory right to operate the Plant, TNB shall continue to make Energy Payments and/or NonAcceptance Payments (if any) to the Project Company in accordance with the PPA to the extent that the Plant is capable of delivering solar photovoltaic energy and to the extent such payments to the Project Company are permitted by law. Any payment made by TNB to the Commission or at the Commission’s direction pursuant to any applicable Law shall for the purposes of the PPA be deemed to be a payment made to the Project Company in accordance with the terms of the PPA and to that extent in full discharge of TNB’s obligation to the Project Company thereunder. Indemnification and Liability The Project Company shall defend, indemnify and hold TNB, and its officers, directors, agents, employees, contractors and subcontractors, harmless from and against any and all claims, judgments, liabilities, losses, costs, expenses (including reasonable lawyers' fees) and damages under all applicable environmental laws or regulations arising out of the condition of the Site, the Project Company's construction, ownership or operation of the Plant, the SPP Interconnection Facility and the SPP Interconnector or the construction of the SPP Works, except to the extent such damages are attributable to the negligence or misconduct of, or breach of the PPA by TNB, its officers, directors, agents, employees, contractors or subcontractors. Likewise, TNB shall defend, indemnify and hold the Project Company and its officers, directors, agents, employees, contractors and subcontractors, harmless from and against any and all claims, judgments, liabilities, losses, costs, expenses (including reasonable lawyers' fees) and damages under all applicable environmental laws or regulations arising out of the condition of, or TNB's ownership or operation of the SPP Works (after their transfer to TNB), except to the extent such damages are attributable to the negligence or misconduct of, or breach of the PPA by the Project Company, its officers, directors, agents, employees, contractors or subcontractors. Neither party is liable to the other for consequential loss. 141
  151. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Change in Law Adjustment If there is a Change-in-Law which requires the Project Company to make any material capital improvement or other material modification to the Plant, the SPP Interconnection Facilities, the SPP Interconnector and/or the SPP Works, the cost of which is in excess of the capital improvement threshold of Ringgit Five Hundred Thousand (RM500,000.00) in any calendar year, which material capital improvement or other material modification is required for the purpose of enabling the Project Company to fulfil its obligations under the PPA in compliance with such Change-inLaw, TNB and the Project Company shall determine, in good faith, any extension of the Term or any adjustment to the Energy Rate to reflect such cost in excess of the capital improvement threshold as may be reasonably incurred by the Project Company in making such material capital improvement or other material modification and the date from which such adjustment is to be effective. After receipt by TNB of the Commission's written approval of: (i) the costs of the material capital improvement or material modification to the Plant, the SPP Interconnection Facilities, the SPP Interconnector and/or the SPP Works, as the case may be; (ii) such extension of the Term or adjustment to the Energy Rate; and (iii) the inclusion of any adjustments to the Energy Rate as part of TNB's tariff rates to its customers in a manner consistent with such adjustments, the Term and/or the Energy Rate shall be adjusted in a manner approved by the Commission provided always that any adjustments to the Energy Rate shall only be effective from the date TNB's tariff rates to its customers as stated in (iii) are effective. Transfers and Assignment Subject always to the approvals of the Commission and the Government, the Project Company shall not sell, convey, transfer or otherwise dispose of the Project or any material part or any interest in it to any other Person without the prior written consent of TNB and the Commission, which consent shall not be unreasonably withheld or delayed. If the Financing Documents so require, TNB shall: (i) provide its consent to assignments and acknowledgement of rights of the Financing Parties (including cure rights and the rights of the Financing Parties under the Financing Documents to be substituted for the Project Company upon the occurrence of any default provided that the Financing Parties shall notify TNB in writing before exercising such rights) as shall be necessary or reasonably appropriate in order to obtain financing for the Project in a timely manner provided that such rights shall be subject to the terms of the PPA and not inconsistent with TNB’s rights hereunder; (ii) make payments to the Project Company directly into a collateral security account established under the Financing Documents (subject to any claims or rights TNB may have against the Project Company under the PPA); 142
  152. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (iii) in the event of a default and provided that a prior written notice has been given to TNB, accept as a substitute for the Project Company under the PPA, the agent for the Financing Parties, any designee or transferee of such agent or any purchaser of the Project Company or the Project upon a foreclosure sale conducted on behalf of the Financing Parties of the Project Company’s interest in the Project or of the issued share capital of the Project Company; and (iv) subject to a prior written notice already been given to TNB, afford the Financing Parties an opportunity to remedy any Event of Default by the Project Company within the relevant cure period hereunder before terminating the PPA. The Project Company acknowledges: (i) that any assignment or transfer to a secured party pursuant to the Financing Documents shall not relieve the Project Company of its obligations to TNB under the PPA; and (ii) no such assignee or transferee shall be liable for the performance of the Project Company’s obligations under the PPA; and (iii) any exercise by any such assignee or transferee shall be subject to the terms of the PPA. Governing Law and Dispute Resolution The PPA is be governed by, and shall be construed in accordance with the laws of Malaysia. If any dispute in relation to the PPA cannot be resolved between the parties by mutual agreement in the manner provided thereunder, then such dispute shall be settled exclusively and finally by arbitration conducted in accordance with the Rules for Arbitration of the Regional Centre for Arbitration at Kuala Lumpur. Subject to the arbitration provisions in the PPA, the parties hereby submit to the exclusive jurisdiction of courts located in Kuala Lumpur, Wilayah Persekutuan. 7.6.2 EPC Contracts In respect of defined terms in this Section 7.6.2 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the EPC Contract. The terms of the EPC Contracts in respect of each of the Plants are substantially similar and references to “EPC Contract” in this Section 7.6.2 shall refer to each of the EPC Contracts, unless otherwise highlighted in this Information Memorandum Background Each of the Project Companies has entered into the EPC Contract with the EPC Contractor on 28 February 2017 as supplemented by the Letters (EPC Contract – Kedah) dated 11 May 2017 and 22 May 2017, the Letters (EPC Contract – Melaka) 143
  153. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum dated 11 May 2017 and 22 May 2017 and the Letter (EPC Contract – Terengganu) dated 22 May 2017, respectively (collectively, the “EPC Contract”), in relation to amongst others the design, engineering, procurement, site preparation and clearing, civil works, manufacturing, construction, construction management, installation, erection, start-up, and other services and items, whether of a temporary or permanent nature to be furnished, supplied or performed by the EPC Contractor and/or any of its Subcontractors or suppliers of any tier, required to complete the Plant and the SPP Works, all on a lump sum, fixed price, turnkey basis as set out in the EPC Contract (“Works”). Subject to the EPC Contract, the Project Company shall not assign its rights and obligations under the EPC Contract without the prior written consent of the EPC Contractor, which consent shall not be unreasonably withheld or delayed. The Project Company shall be entitled (without the consent of the EPC Contractor) to cede, delegate, assign or transfer any right, benefit, interest or burden or obligation in or under or arising out of the EPC Contract including all warranties to the Lenders by way of security for the performance of obligations to the Lenders and afford the Lenders step-in rights in the event of default of the Project Company (i) to secure any obligation of the Project Company under any Financing Agreement and notwithstanding any provision of the EPC Contract which entitles the EPC Contractor to terminate the EPC Contract for the default of the Project Company, shall afford the Lenders an opportunity to remedy the default by the Project Company before giving effect to any termination under this EPC Contract; (ii) as contemplated in any Direct Agreement; and (iii) to any party acquiring the Works or the completed Works. Contract Price The Project Company shall pay the EPC Contractor a lump-sum price of Ringgit Three Hundred Forty Four Million Two Hundred Twenty Thousand and One Hundred Eleven (RM344,220,111.00) under the EPC Contract (Kedah), Ringgit Three Hundred Forty One Million Three Hundred Sixteen Thousand and Four Hundred Thirty (RM341,316,430.00) under the EPC Contract (Melaka) and Ringgit Three Hundred Fifty Four Million Nine Hundred Seventy Two Thousand and Eight Hundred Ninety Four (RM354,972,894.00) under the EPC Contract (Terengganu), respectively. Payments under the EPC Contract are based on specified milestone achievements. The Project Company is responsible for payment of all goods and services tax and Malaysian customs’ duties. The EPC Contractor is responsible for all other taxes. EPC Contractor's obligations The EPC Contractor under the EPC Contract is under a general obligation to, amongst others: (i) execute and complete the Works in accordance with the EPC Contract and the requirements set out in the PPA and the Prudent Utility Practices, and shall remedy any defect, failure, imperfection or fault in the Works including those attributable (in whole or in part) to defects, failure, imperfections or faults in the design, materials or workmanship of the EPC Contractor, or any act, omission or default of the EPC Contractor; (ii) provide to the Project Company a fully completed, new and operational solar photovoltaic electricity generation plant: 144
  154. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (iii) (a) which can be connected, dispatched, operated and deliver power in accordance with all applicable laws, necessary consents and the Project Documents; and (b) which will be capable of achieving the performance levels required under the PPA and in accordance with the EPC Contract for a period of twenty five (25) years from the Facility Provisional Acceptance Date, it being acknowledged that following the expiry of the Defects Notification Period or the expiry of any extension to the Defects Notification Period, the Project Company’s recourse shall be against the suppliers of the key components of the Plant (provided that the EPC Contractor has complied with its relevant obligations as set out under the EPC Contract); perform the Works, including but not limited to the following: (a) design, procure, construct, manufacture, deliver to the Site and erect or install all equipment, systems, components and Materials necessary to achieve successfully the Guaranteed Performance Ratio, to commission and be ready for Facility Provisional Acceptance within the Time for Completion, to complete successfully the Tests on Completion and to achieve the issuance of the Provisional Acceptance Certificates for the Plant and the SPP Works all as described in the EPC Contract, on a fixed price, lump sum turnkey basis; (b) design, engineer, construct and commission the Plant and the SPP Works, as the case may be, in accordance with the requirements of the PPA; and (c) design, engineer and construct the Plant to meet the standards and requirements more particularly described in the EPC Contract; (iv) connect the Plant to the Utility’s facility to deliver solar photovoltaic electricity to the Utility; (v) exercise due care and skill at all times in performing its obligations under the EPC Contract; (vi) install or procure the installation of the Metering Equipment as set out in the PPA. Variation The Project Company may, at any time, prior to issuing the SPP Works Provisional Acceptance Certificate or the Facility Provisional Acceptance Certificate, as applicable, initiate a variation to the SPP Works or the Plant, as the case may be, either by an instruction or by a request for the EPC Contractor to submit a proposal. A Variation shall not comprise the omission of any work which is to be carried out by others. The EPC Contractor shall execute and be bound by each Variation Order, unless the EPC Contractor promptly gives notice to the Project Company stating (with supporting particulars acceptable to the Project Company) that (i) the EPC Contractor cannot readily obtain the Goods required for the Variation or (ii) it will 145
  155. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum reduce the safety or suitability of the Works. Upon receiving this notice, the Project Company shall cancel, confirm or vary the Variation Order. Commencement of Works The EPC Contractor agrees that it shall commence the execution of the works in accordance with the following provisions: (i) Following satisfaction of the conditions precedent, the Project Company shall issue the Notice to Proceed. Commencement Date shall occur upon receipt by the EPC Contractor of the Notice to Proceed. The Commencement Date has occurred on 28 February 2017 for each of the Projects. (ii) Upon the occurrence of Commencement Date, the EPC Contractor shall against the payment of the Advance Payment, which payment shall always be subject to the EPC Contractor having provided the Advance Payment Bond to the Project Company, diligently perform the works to completion in accordance with the EPC Contract so that the Facility Provisional Acceptance Date is achieved before 31 December 2017. For the purpose of issuance of the Advance Payment Bond, the Project Company shall no later than seven (7) days from the date on which the Advance Payment is expected to be made to the EPC Contractor, notify the EPC Contractor of the same so as to enable the EPC Contractor to prepare such Advance Payment Bond against which the Advance Payment will be made by the Project Company. Extension of time The EPC Contractor is entitled, subject to the provisions of the EPC Contract, to an extension of the time for completion if the completion is or will be delayed by any of the following causes: (a) a variation in respect of additional works instructed via a variation order to be undertaken by the EPC Contractor (unless an adjustment to the time for completion has been agreed or denied in which event the EPC Contractor shall not be entitled to an adjustment to the time for completion); and (b) a cause of delay which under the EPC Contract gives an entitlement for the EPC Contractor to apply for an extension of time under the EPC Contract; and (c) any delay, impediment or prevention caused by or attributable to the Project Company (including where caused by breach of the EPC Contract by the Project Company), the Project Company's personnel, or the Project Company's other contractors on the site which directly affects the progress of the works and cause a delay in the completion of the Works. For the avoidance of doubt, the EPC Contractor shall not be entitled to an extension if and to the extent that (A) the EPC Contractor fails to take steps to minimise any such delay, (B) such completion is or will be delayed by any act or omission of the EPC Contractor in breach of the EPC Contract, or (C) any such delay is concurrent with any delay caused by any act or omission of the EPC Contractor in breach of the EPC Contract or delay for which the EPC Contractor is responsible. 146
  156. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Suspension of Work The Project Company may at any time instruct the EPC Contractor to suspend progress of part or all of the Works. During such suspension, the EPC Contractor shall protect, store and secure such part or the Works against any deterioration, loss or damage. The Project Company may also notify the cause for the suspension. If and to the extent that the cause is notified and is the responsibility of the EPC Contractor or is caused by a Force Majeure Event, the following provisions in the EPC Contract in respect of “Consequences of Suspension”, “Payment for Plant and Materials in Event of Suspension” and “Prolonged Suspension” shall not apply. If the EPC Contractor becomes entitled to suspend performance of its obligations pursuant to the provision in the EPC Contract in respect of “Delayed Payment”, the Project Company shall be deemed to have instructed the EPC Contractor to suspend for a cause which is not the responsibility of the EPC Contractor. Defects liability period The EPC Contractor guarantees and warrants that the Works shall be free from all Defects and shall be in the condition required by the EPC Contract (fair wear and tear excepted) for the duration of the Base Defects Notification Period, as follows: (a) in respect of the Plant, the warranty period shall be twenty four (24) months from the Facility Provisional Acceptance Date; and (b) in respect of the SPP Works, the warranty period shall be twenty four (24) months from the SPP Works Provisional Acceptance Date. The Base Defects Notification Period shall be extended for a period of twenty four (24) months from the completion date of any repair/replacement works carried out where any parts of the Works are being repaired and/or replaced during the Base Defects Notification Period. Notwithstanding the foregoing, the Base Defects Notification Period will not extend beyond a period of forty eight (48) months from the date of expiry of the Base Defects Notification Period. In the event that any Latent Defects shall appear or be discovered by the Project Company within sixty (60) months from the Facility Provisional Acceptance Date, the EPC Contractor shall make good at its own expense by repair, replacement, adjustment and/or modification of such relevant part of the Works. The EPC Contractor further represents and warrants that the Metering Equipment shall be free from defects in materials and workmanship and that all equipment and items relating to the Metering Equipment shall be installed and all work shall be performed in accordance with Prudent Utility Practices, the requirements set out in the PPA and other requirements of the equipment manufacturers or suppliers, for the warranty period of twenty four (24) months from the date of transfer of the Metering Equipment. The warranty period for the Metering Equipment shall be extended for a period of twenty four (24) months from the completion date of any repair or replacement works carried out where any parts of the Metering Equipment are being repaired and/or replaced during the warranty period for the Metering Equipment. Notwithstanding the 147
  157. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum foregoing, the warranty period for the Metering Equipment will not extend beyond a period of thirty six (36) months from the date of transfer of the Metering Equipment to the Project Company. The EPC Contractor is also responsible to make good (at its own cost) and shall be responsible for any latent defects in the Metering Equipment for a period of sixty (60) months from the date of transfer of the Metering Equipment to the Project Company. Performance Ratio Test As soon as practically possible after the Initial Operation Date, the EPC Contractor shall carry out the Commissioning Test in accordance with the relevant provisions in the EPC Contract in respect of “Commissioning, Testing and Provisional Acceptance of the Facility” and “Testing”, the Employer’s Requirements, any notification requirements in the PPA, and the requirements for the Commissioning Tests stated in the schedule of the EPC Contract in respect of “Testing and Commissioning [PPA Requirements]”. The purpose of the Commissioning Test shall be to demonstrate Grid compliance and the functionality of the Plant (or part of the systems, as applicable) for the purpose of proceeding with the Facility Completion Tests. If the Works fail to pass the performance ratio test (as may be repeated in accordance with the EPC Contract), the Project Company shall, without prejudice to any other right or remedy it may have under the EPC Contract or at law, at its sole discretion be entitled to the following non-exhaustive remedies: (i) order further repetition of the performance ratio test; (ii) if the failure deprives the Project Company of substantially the whole benefit of the Works (or a part thereof), reject the Works (or such part thereof) (with applicable remedies thereon); or (iii) issue the Provisional Acceptance Certificate. In the event that a Provisional Acceptance Certificate is issued, the EPC Contractor shall proceed in accordance with all other obligations under the EPC Contract, and the EPC Contractor shall pay to the Project Company the Performance Liquidated Damages in accordance with the EPC Contract in respect of the shortfall between the Guaranteed Performance Ratio and Minimum Performance Ratio provided that such Performance Liquidated Damages shall not exceed ten per cent (10%) of the Contract Price (“Performance LDs Cap”). Liquidated damages Delay If the EPC Contractor fails to achieve the Commercial Operation Date, it shall pay the Project Company delay damages at the rate of Ringgit One Hundred Sixteen Thousand Six Hundred and Sixty Seven (RM116,667.00) per day for each day of delay (“Delay Damages”) in achieving the Commercial Operation Date beyond the Time for Completion up to and including the actual achievement of Commercial Operation Date. 148
  158. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum The EPC Contractor's liability for Delay Damages shall not exceed a cap of fifteen per cent (15%) of the Contract Price. If the EPC Contractor fails to pay such delay damages when due, the Project Company may set off the Delay Damages, if any, against remaining payments of the Contract Price due to the EPC Contractor. In the event that the remaining payments are insufficient, the EPC Contractor shall pay such delay damages immediately upon demand in writing by the Project Company and the Project Company shall be entitled to commence recovery proceedings and charge interest on such unpaid amounts at the default rate. Performance Security Parent Company Guarantee The EPC Contractor shall deliver to the Project Company a guarantee issued by Scatec Solar ASA (the “Parent Company Guarantee”). The EPC Contractor shall ensure that the Parent Company Guarantee remains valid and enforceable until the expiry of the EPC Contractor's obligations in respect of Latent Defects in the EPC Contract or seven (7) years after the issuance of the Performance Certificate, whichever later. Notwithstanding any other provision of the EPC Contract, the liability of the Parent Company under the Parent Company Guarantee shall in no event exceed the liability of the EPC Contractor under the EPC Contract. Advance Payment Bond In consideration of the payment of the Advance Payment by the Project Company, the EPC Contractor shall provide the Project Company with a bond (the “Advance Payment Bond”), representing twenty five (25%) of the Contract Price. The Advance Payment Bond shall be effective from the date on which the Advance Payment is made to the EPC Contractor until the date of issuance of the Advance Payment Certificate. If by fourteen (14) days prior to the expiry date of the Advance Payment Bond, the issuance of the Advance Payment Certificate has not occurred, the Project Company shall be entitled to instruct the EPC Contractor to extend the validity period of the Advance Payment Bond until the issuance of the Advance Payment Certificate has occurred, failing such extension by the EPC Contractor, the Project Company shall be entitled to make a claim on the Advance Payment Bond prior to its expiry. If requested by the Project Company, the EPC Contractor undertakes to enter into an agreement with the Lenders acknowledging and agreeing (inter alia) to the assignment of the rights of the Project Company to such Advance Payment Bond to the Lenders. The Advance Payment Bond shall be returned to the EPC Contractor within fourteen (14) days after the expiry of the validity of the Advance Payment Bond if uncalled by the Project Company. Performance bond The EPC Contractor is required to obtain a bond to guarantee the performance of the EPC Contractor. The performance bond bond must be issued to the Project Company prior to any payment from the Project Company. The performance bond 149
  159. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum shall at all times be for an amount equivalent to ten per cent (10%) of the Contract Price. The Performance Bond shall remain valid until the issuance of the Facility Provisional Acceptance Certificate, and shall be returned to the EPC Contractor, if uncalled by the Project Company within fourteen (14 days) after the issuance of the Facility Provisional Acceptance Certificate. Warranty bond The EPC Contractor is required to obtain a bond to guarantee any defects liability of the EPC Contractor. The warranty bond effective from the date of issue duly executed by a first class bank must be issued the Project Company. The warranty bond shall at all times be for an amount equivalent to five per cent (5%) of the Contract Price. The warranty bond shall be valid until the issuance of the Performance Certificate, and shall be returned to the EPC Contractor, if uncalled by the Project Company within fourteen (14) days after the issuance of the Performance Certificate. The EPC Contractor’s representative shall, on behalf of the EPC Contractor, receive instructions from the Project Company, or from the Project Company’s Representative or an assistant to whom the appropriate authority has been delegated under the provision in the EPC Contract in respect of “Instructions”. Indemnities The EPC Contractor shall indemnify and hold harmless the Project Company, the Project Company’s Personnel, and their respective agents, against and from all claims, damages, losses and expenses (including legal fees and expenses), in respect of, among others: (i) bodily injury, sickness, disease or death, of any person whatsoever arising out of or in the course of or by reason of the design, execution and completion of the Works and the remedying of any Defects and damage, unless and to the extent attributable to any negligence, wilful act or breach of the EPC Contract by the Project Company, the Project Company’s Personnel, or any of their respective agents, and (ii) damage to or loss of any property, real or personal (other than the Works), to the extent that such damage or loss: (A) arises out of or in the course of or by reason of the design, execution and completion of the Works and the remedying of any Defects, and (B) is not attributable to any negligence, wilful act or breach of the EPC Contract by the Project Company, the Project Company’s Personnel, their respective agents, or anyone directly or indirectly employed by any of them. The Project Company also provides a reciprocal indemnity to the EPC Contractor for death or injury in respect of the Project Company’s personnel, or any of their respective agents, and damage to or loss of any property, real or personal (other than to any of the Works), to the extent that such damage or loss is attributable to any negligence or wilful misconduct by the Project Company, the Project Company’s Personnel, their respective agents or anyone employed by any of them. 150
  160. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Limitation of liability (i) To the extent permitted by any Applicable Law neither Party shall be liable to the other Party for loss of profit, loss of any contract or for any indirect or consequential loss or damage which may be suffered by the other Party in connection with the EPC Contract, other than under the relevant provisions in the EPC Contract in respect of “Employer's Use of Contractor's Documents”, “Delay Damages”, “Tests on Completion - Performance Ratio Test”, “Failure to Remedy Defects”, “Tests after Completion”, “Payment after Termination”, “Payment on Termination” and “Indemnities”. (ii) The total liability of the EPC Contractor to the Project Company, under or in connection with the EPC Contract other than under the relevant provisions in the EPC Contract in respect of “Employer's Use of Contractor's Documents”, “Electricity, Water and Gas”, “Delay Damages” and “Indemnities” shall not exceed the Contract Price (as adjusted in accordance with the terms under the EPC Contract). (iii) To the extent permitted by any Applicable Law, the total liability of the Project Company to the EPC Contractor, other than the obligation of the Project Company to pay the Contract Price, shall not exceed the Contract Price (as adjusted), provided that such limitation of liability shall not apply to the EPC Contractor's obligations to remove any liens, claims, security interest or other encumbrances. (iv) There shall not be any limitation of liability as set out above in any case of any Sanctionable Practice or other fraud, corrupt acts, deliberate default or reckless misconduct by the defaulting Party. (v) If and to the extent that the liability of either Party is covered by any policy of insurance (or would have been covered but for a breach by that Party of its insurance obligations), such liability shall not count towards any limit on the liability of the relevant Party, except for any case of fraud, corrupt acts, deliberate default or gross reckless misconduct by the defaulting Party. EPC Contractor’s Liability and O&M Agreement The EPC Contractor shall not be entitled to any extension of time nor any additional payment nor any other relief under the EPC Contract for any loss or delay it suffers in relation to the Works, to the extent such loss or delay was caused by any act or omission of the O&M Contractor or the manager for the asset management of the Project under an asset management agreement (“Manager”), at any time when the O&M Contractor or Manager (as the case may be) was the same entity as or an Affiliate of the EPC Contractor. Force majeure If a force majeure event occurs, the affected party's obligations under the EPC Contract shall be suspended or excused to the extent their performance is affected by the force majeure event, subject to the terms of the EPC Contract. Under the EPC Contract, a force majeure event means an event, condition or circumstance or its effect which, is beyond the reasonable control of a party, and which causes a delay or disruption in the performance of any obligation under the 151
  161. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum EPC Contract despite all reasonable efforts of the party claiming a force majeure event to prevent it or mitigate its effects. Force majeure events include, among others, the following: (i) strikes or lockouts and/or other work stoppages or industrial action; (ii) acts of public enemies or terrorists or acts of war; (iii) public disorders, demonstrations; (iv) explosions, fire, earthquakes, landslides, subsidence, sabotage and/or other natural calamities and acts of God; (v) unusually severe weather conditions; (vi) expropriation or compulsory acquisition by any government entity; (vii) failure to obtain or renew any government authorisations; (viii) any emergency conditions; and (ix) any force majeure event affecting the performance of any person that is a party to the EPC Contract or other contract between the Project Company and such person relating to the construction, operation or maintenance of the Plants, the SPP Interconnection Facilities, the SPP Interconnector and/or the construction of the SPP Works. insurrection, rebellion, sabotage, riots or violent Either party may terminate the EPC Contract with not less than thirty (30) days' written notice if a force majeure event prevents either party from substantially performing any material obligations under the EPC Contract for a period which exceeds one hundred and eighty (180) days. If a force majeure event cannot be remedied within one hundred and eighty (180) days with the use of reasonable diligence, then that period shall be extended for a further period of one hundred and eighty (180) days. If the party affected is unable to remedy the force majeure event by the end of the further period of one hundred and eighty (180) days, the parties shall consult as to what steps shall be taken with a view to mitigating or remedying the consequences of the relevant force majeure event, having regard to all the circumstances. If the parties are unable to agree to extend the further period of one hundred and eighty (180) days, either party may terminate the EPC Contract by giving thirty (30) days' written notice of termination. Insurance The EPC Contractor is responsible for obtaining insurance in respect of the goods and materials before despatch from their premises, the EPC Contractor’s equipment on the site as well as the typical liability insurance policies, such as the following insurances: (a) insurance for the Works and the Contractor’s Equipment; 152
  162. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (b) insurance against injury to persons and damage to property; (c) insurance for the EPC Contractor’s Personnel; (d) insurance for motor vehicle; and (e) professional indemnity insurance. Termination by the Project Company The Project Company may terminate the EPC Contract on the occurrence of any one of the following events, among others: (i) the EPC Contractor is in breach of the terms of the EPC Contract and fails to comply with a notice to correct; (ii) the EPC Contractor abandons the Works or otherwise plainly demonstrates the intention not to continue performance of his obligations under the EPC Contract for a period of more than fifteen (15) consecutive days; (iii) the EPC Contractor without reasonable excuse fails to proceed with the Works after the Commencement Date; (iv) the Commercial Operation Date has not been achieved by 1 June 2018 (the “Long Stop Date”) (for the avoidance of doubt, notwithstanding that the Delay LDs Cap may not have been reached), provided that the Project Company shall be entitled to terminate three (3) months prior to the Long Stop Date if in the determination of the Independent Engineer (if applicable), it is clear by such date, the EPC Contractor will not achieve the Commercial Operation Date by the Long Stop Date; (v) the EPC Contractor subcontracts the whole of the Works or assigns the EPC Contract without the prior written consent of the Project Company; (vi) an Insolvency Event occurs in relation to the EPC Contractor or the Parent Company; (vii) the EPC Contractor, the EPC Contractor's Personnel, any afiliate of the EPC Contractor or subcontractor engages in a Sanctionable Practice or commits a material misrepresentation in matters which substantially and adversely affect the Project Company or the undertaking to its obligations under the EPC Contract; (viii) termination of the PPA due directly to the act or omission of the EPC Contractor; termination of the RPS Agreement and/or the RCPS Agreement prior to the achievement of Financial Close where such termination is due to the default of the Contractor or by an Affiliate of the EPC Contractor; (ix) the Delay LDs Cap and/or Performance LDs Cap is reached or the EPC Contractor incurs liability which reaches the sum of the Contract Price (as adjusted in accordance with the terms under the EPC Contract) or any other limit on the liability of the EPC Contractor is reached (unless such of limit of liability is waived by the Project Company); 153
  163. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (x) failure to provide any Performance Security; (xi) any act or omission of the EPC Contractor causes an event of default by the Project Company under a Project Document (a “Project Company's Breach of Contract”), and as a result the Project Document is terminated by the counterparty to such Project Document, provided always that: (A) the Project Company’s Breach of Contract is due to the act or omission of the EPC Contractor; (B) the counterparty to the specific Project Documents terminates the Project Document due to such act and/or omission; and (C) there is no dispute between the Project Company and the EPC Contractor as to which party is responsible for causing the Project Company’s Breach of Contract; (xii) the existence of any Defect or damage which deprives the Project Company of the benefit of the whole or substantially the whole of the Works; or (xiii) any of the insurance policies to be taken out by the EPC Contractor ceases to be effective and the EPC Contractor fails to replace it within fifteen (15) days. In any of these events or circumstances, the Project Company may, upon giving fourteen (14) days' notice to the EPC Contractor, terminate the EPC Contract. However, in the case of (vi) and (a)(vii), the Project Company may by notice terminate the EPC Contract immediately. Upon termination the EPC Contractor shall: (i) then leave the Site and deliver any required Goods, all EPC Contractor's documents, and other design documents made by or for him, to the Project Company; (ii) comply immediately with any reasonable instructions for the protection of life or property or for the safety of the Works; and (iii) if required by the Project Company, (as the Project Company may elect) novate any subcontractor to the Project Company or to assign the benefit of any subcontract with a subcontractor to the Project Company. After termination, the Project Company may complete the Works and/or arrange for any other entities to do so. The Project Company and these entities may then use any Goods, EPC Contractor's documents and other design documents made by or on behalf of the EPC Contractor. The Project Company shall then give notice that the EPC Contractor's Equipment and Temporary Works will be released to the EPC Contractor at or near the Site. The EPC Contractor shall promptly arrange their removal, at the risk and cost of the EPC Contractor. However, if by this time the EPC Contractor has failed to make a payment due to the Project Company, these items may be sold by the Project Companyin order to recover this payment. Any balance of the proceeds shall then be paid to the EPC Contractor. The Project Company may also terminate the EPC Contract in writing for any other reason, at its convenience. 154
  164. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum The EPC Contractor may terminate the EPC Contract on the occurrence of any one of the following events, among others: (i) the EPC Contractor does not receive the amount due within sixty (60) days after the expiry of the time within which payment is to be made; (ii) the Project Company substantially fails to perform his other obligations under the EPC Contract or a material aspect of its obligations which renders the EPC Contractor unable to achieve the Facility Provisional Acceptance; (iii) a prolonged suspension affects the whole of the Works; (iv) any of the Project Documents are terminated; (v) an insolvency event occurs in relation to the Project Company; and (vi) the Project Company, the Project Company's personnel, or any affiliate of the Project Company engages in a sanctionable practice or commits a material misrepresentation in matters which substantially and adversely affect the EPC Contractor or the undertaking to its obligations under this EPC Contract. Dispute resolution The EPC Contract is governed by the laws of Malaysia. In the event of any dispute, a party may serve on the other a notice of dispute and the parties shall meet any attempt to resolve the dispute in good faith on or before the date that is thirty (30) days after such notice of dispute was received by the other party. Any dispute, controversy or claim arising out of or relating to the EPC Contract that cannot be resolved amicably shall be settled by arbitration in accordance with the Rules of Arbitration of the Kuala Lumpur Regional Centre for Arbitration. 7.6.3 O&M Agreements In respect of defined terms in this Section 7.6.3 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the O&M Agreements. The terms of the O&M Agreements in respect of each of the Plants are substantially similar and references to “O&M Agreement” in this Section 7.6.3 shall refer to each of the O&M Agreements, unless otherwise highlighted in this Information Memorandum. Overview Each of the Project Companies has entered into the O&M Agreement with the O&M Contractor on 25 May 2017, whereby the Project Company has appointed the O&M Contractor to carry out, amongst others, the provision or procurement and the performance of all the works, services, supplies and other activities necessary to operate and maintain the Plant up to the physical connection point between the power station and the Grid System (“Delivery Point”) in accordance with the terms of 155
  165. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum the O&M Agreement, including but not limited to the services described in the O&M Agreement in respect of “Services”, “Ordinary Maintenance” and “Corrective Maintenance” (the “Services”). Term The term of the O&M Agreement shall be for the period from the date of the O&M Agreement until the date falling eighteen (18) years after the Commercial Operation Date, unless terminated earlier or extended further in accordance with the provisions of the O&M Agreement. Payment The Project Company will pay to the O&M Contractor with effect from the start of the Mobilisation Period an annual fee plus GST in the amounts stipulated in the O&M Agreement, if applicable (the “Fee”), subject to: (i) an annual upward adjustment equal to the annual fee for the preceding Contract Year plus a rate equivalent to the increase in the Malaysian Consumer Price Index during the preceding Contract Year, with the first of such adjustment to take place on the first (1st) anniversary of the Commercial Operation Date, and (ii) provided that, for the purposes of calculating the Fee for the initial Contract Year, the Fee shall be reduced by fifty per cent (50%) during the Mobilisation Period and twenty five per cent (25%) during the Interim Operating Period. The Fee covers, inter alia, all costs incurred in connection with the Services provided by the O&M Contractor under the O&M Agreement including (irrespective of the amount) costs internal to the O&M Contractor and invoiced by third parties retained by the O&M Contractor to perform the Services. For the avoidance of doubt, the cost of consumables is included in the Fee. The Fee shall be payable in quarterly instalments in arrears with the first instalment becoming payable no earlier than three (3) months after the Facility Provisional Acceptance Date; provided, however, the first instalment shall also include the Fee applicable during the Mobilisation Period. At any time after the three (3) year anniversary of the date of the O&M Agreement (but no more than once every three (3) years thereafter) the O&M Contractor may request an increase in the Fee, provided that the O&M Contractor delivers evidence to the reasonable satisfaction of the Project Company that the O&M Contractor's costs have increased at a rate greater than inflation and/or the O&M Contractor has incurred additional costs that were unforeseen at the time of entry into of the O&M Agreement or at the time of the previous Fee negotiation as the case may be. Obligations of the O&M Contractor Mobilisation Period Services During the Mobilisation Period, the O&M Contractor shall perform the following ordinary maintenance services and activities relating to the operation and maintenance of the Plant up to the Delivery Point: 156
  166. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (a) preparation of a mobilisation plan; (b) recruitment; (a) planning for the operational phase, including preparation of the operating and administrative procedures for the Plant; (b) preparation of the O&M budget for the first year of operation; (c) training (if necessary in addition to the training provided by the EPC Contractor); (d) procurement of consumables not provided by others; (e) receiving and storing Spare Parts, Maintenance Tools and consumables; (f) planning for the environmental monitoring and reporting; and (g) supporting the Project Company in the review of the plant design produced by the EPC Contractor. Interim Operating Period During the Interim Operating Period, the O&M Contractor shall perform the following ordinary maintenance services and activities relating to the operation and maintenance of the Plant up to the Delivery Point: (a) facility monitoring will be performed for twenty four (24) hours a day, seven (7) days a week by means of the Scatec Solar SCADA and remote plant monitoring system; (b) maintenance personnel will be present during normal working hours; (c) communication with external stakeholders will be managed on behalf of the Employer where appropriate and where applicable; (d) operational reporting will be done on a daily, monthly and annual basis and will be structured in accordance with contractual requirements; (e) Spare Parts will be managed on behalf of the Project Company in accordance with the criteria depicted in the O&M Agreement; (f) additional services that may be identified as necessary during the Interim Operating Period will be communicated to the Project Company; (g) maintenance outputs include the detailed reviews of maintenance requirements and comparison to O&M, EPC, Equipment Suppliers requirements. Assessment of all equipment calibrations and certified compliance. Early initiation of scheduled maintenance for early assessment of maintenance requirements; (h) unscheduled maintenance activities as permitted under the EPC Contract; 157
  167. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (i) detailed plant inspections under supervision of the Plant Safety Engineer, for early identification of equipment non-conformance or potential defects; and (j) module soiling analysis for optimised washing cycles. Operating Period Services During the Operating Period, the O&M Contractor shall be obliged to provide or procure the works, services, supplies and other activities necessary to operate and maintain the Plant in accordance with the requirements of the PPA, and the O&M Contractor shall be responsible for maintaining proper functioning of the Project with regard to availability and functionability. The Services shall include, but shall not be limited to: (a) ordinary maintenance as set out in the O&M Agreement; (b) corrective maintenance as set out in the O&M Agreement; (c) management of catastrophic events; (d) providing all necessary Site security and surveillance services (including all services relating to lighting, fencing, entry and exit procedures and security, but excluding hardware and equipment) to protect the Plant; (e) monitoring the performance of the Plant including through remote web-based tele control system; (f) Site maintenance services including without limitation, cleaning of solar photovoltaic modules at the intervals set out in the O&M Agreement; (g) the procurement, management and storage of all Spare Parts and Maintenance Tools in accordance with the O&M Agreement; and (h) conducting all required correspondence, coordination and liaison with the Utility, and other service companies and third parties operating at the Plant or otherwise engaged by the Project Company, as may be set out in addition to any other words, services, supplies and other activities specified in the O&M Agreement in respect of “Ordinary Maintenance” and “Corrective Maintenance”. Managing Spare Parts The O&M Contractor shall procure, manage and store all Spare Parts that the O&M Contractor requires for the performance of the Services and the costs of the same shall be covered within the Fee except as provided under the O&M Agreement. The O&M Contractor shall be responsible for replacing any Spare Part lost or damaged at any time prior to the installation or incorporation of such Spare Part into the Plant. The O&M Contractor shall be responsible for the safe removal and disposal on behalf of the Project Company of the part which has been replaced by a Spare Part in accordance with Applicable Law and Prudent Utility Practices. 158
  168. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Maintenance Tools The Project Company shall at the sole discretion of the Project Company on the recommendation by the O&M Contractor make available to the O&M Contractor the Maintenance Tools for use by the O&M Contractor, who shall be responsible for the management, maintenance and storage of the Maintenance Tools. The Maintenance Tools will be utilized by the O&M Contractor during the Operating Period but the Maintenance Tools and the storage facilities will remain the property of the Project Company. Any Maintenance Tools needing replacement due to fair wear and tear will be presented to the Project Company, and on approval by the Project Company, at his sole discretion, will be replaced by the O&M Contractor at the cost of the Employer. Any Maintenance Tools lost or damaged by the O&M Contractor shall be replaced at the cost of the O&M Contractor. The O&M Contractor shall be responsible for ensuring that, other than the Maintenance Tools, the O&M Contractor has all tools, machinery and equipment (including consumables) that are necessary to enable the O&M Contractor to perform the Services, and that the same are fit for carrying out the relevant Services and are of the type and in the condition as would be used acting in accordance with Prudent Utility Practices and otherwise comply with the requirements of the Manufacturer's Recommendations and the Operation and Maintenance Manuals. Suspension The O&M Contractor shall upon receipt of a Notice of Suspension issued by the Project Company suspend any or all of the Services being undertaken by the O&M Contractor and/or any of the other obligations of the O&M Contractor (until such Notice of Suspension is revoked) as identified and in such manner as the Project Company sets out in its Notice of Suspension and shall, during such a suspension, properly protect such Services, Spare Parts, Maintenance Tools, consumables and/or equipment as are affected by any such suspension so far as is necessary in accordance with Prudent Utility Practices. Unless the Project Company issues a Notice of Suspension as a result of the O&M Contractor's negligent acts or omissions or due to the O&M Contractor being in default or breach of its obligations under the O&M Agreement, the Parties shall determine an amount to be payable to the O&M Contractor as an adjustment to the Fee in respect of any increased costs reasonably incurred by the O&M Contractor as a result of such suspension. Following any Notice of Suspension, as a result of the O&M Contractor's negligent acts or omissions or due to the O&M Contractor being in default or breach of its obligations under the O&M Agreement, the Parties shall determine an appropriate reduction to the Fee in respect of any Services not provided by the O&M Contractor during such suspension period. The Parties shall meet to negotiate in good faith and agree any increase or a reduction of the Fees as soon as reasonably practical after such suspension. If the Parties fail to agree, such amounts shall be determined by an Expert in accordance with the O&M Agreement. [The rest of this page has been intentionally left blank] 159
  169. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Termination Termination by the Project Company The Project Company shall be entitled to terminate the O&M Agreement on the occurrence of the following events: (a) unjustified suspension of any of the Services (or a substantial portion thereof) by the O&M Contractor for a continuous period of fifteen (15) days or an aggregate period of thirty (30) days during any applicable Contract Year; (b) the insurance policies to be taken out by the O&M Contractor cease to be effective and the O&M Contractor does not replace them within fifteen (15) days; (c) the O&M Contractor assigns the O&M Agreement or subcontracts the Services, in whole or in part, without obtaining the Project Company's prior written consent; (d) an Insolvency Event occurring in relation to the O&M Contractor or the O&M Contractor's Parent Company Guarantor; (e) any limit on the liability of the O&M Contractor is reached; (f) any default with any Project Document is caused by the O&M Contractor and such default has a material adverse effect on the Plant or the Project Company; (g) failure of the O&M Contractor to pay any amount that it is due under the O&M Agreement and undisputed within thirty (30) days after the amount became due and payable and does not pay such amount within ten (10) days of a notice from the Project Company that such amount is overdue; (h) any other material breach by the O&M Contractor of the O&M Agreement which is not remedied within thirty (30) days following receipt of the written notice by the Project Company stating that a material breach of the O&M Agreement has occurred and identifying the breach in question; and (i) the O&M Contractor breaches any law or regulation in relation to corrupt practices and/or commits or engages in any Sanctionable Practice in relation to the Project, and the Project Company may terminate the employment of the O&M Contractor forthwith by giving written notice to the O&M Contractor. Termination by the O&M Contractor The O&M Contractor shall be entitled to terminate the O&M Agreement on the occurrence of the following events: (a) a delay in payment of the O&M Contractor's Fee for a period in excess of thirty (30) days from the date on which the relevant payment should have been made and the Project Company has not paid such amount within ten (10) Business Days' notice from the O&M Contractor that such amount is 160
  170. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum overdue; (b) any of the Project Company's Authorisations are annulled, revoked or in any case declared inoperative for reasons attributable to the Project Company, to the extent that: (i) such an event is objectively sufficient to impede the possibility of the O&M Contractor to fulfil its obligations pursuant to the O&M Agreement; and (ii) such permits have not been renewed, replaced or restored within sixty (60) days of the written notice of default by the O&M Contractor; (c) suspension of the Services for more than ninety (90) consecutive days for reasons exclusively attributable to the Project Company; or (d) an Insolvency Event occurs in relation to the Project Company, then the O&M Contractor may give to the Project Company, with a copy to the Project Company's Representative and the Lenders, a notice specifying the default. The O&M Contractor shall, subject always to the terms under the direct or assignment agreement entered into between the O&M Contractor and the Lenders, be entitled, at its sole option, either to suspend its performance under the O&M Agreement until such default is remedied (in which case any such period of suspension shall not be to the prejudice of the O&M Contractor as to any of its obligations hereunder, and the provisions of the O&M Agreement in respect of “Suspension” shall apply to any such suspension), or to terminate its employment under the O&M Agreement by giving thirty (30) days' written notice to the Project Company, with a copy to the Project Company's Representative. If the event giving rise to the right to terminate is cured before the expiry of the thirty (30) days' notification period, the termination notice shall be deemed to be revoked and the O&M Agreement shall not terminate. Termination for Force Majeure Event In the event of the occurrence of a Force Majeure Event that lasts for more than a continuous period of one hundred eighty (180) days, either Party may terminate the O&M Agreement upon written notice to the other Party. No Party shall be liable to pay any compensation in respect of such termination. Limitations on Liability Liability for Indirect Damage Neither Party shall be liable to the other for any damages in respect of loss of profit or any damages in respect of indirect losses including loss of use, loss of production or loss of contracts that may be suffered by the other. Maximum Liability (a) Except as otherwise stated in the O&M Agreement, the maximum liability of the O&M Contractor to the Project Company shall be limited in the aggregate, 161
  171. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum in respect of any and all claims of any kind whatsoever arising under the O&M Agreement, to two hundred per cent (200%) of the Fee (Indexed) for the Contract Year during which the incident giving rise to the O&M Contractor’s claim occurs (“Liability Cap”). (b) In calculating the unexpended amounts of the limits of liability of the O&M Contractor, any insurance proceeds received by the O&M Contractor or the Employer under insurance coverage obtained by the Parties will not operate to reduce the said unexpended limits of liability. (c) The O&M Contractor shall not be entitled to any extension of time (if applicable) nor any additional payment nor any other relief under the O&M Agreement for any loss or delay it suffers in relation to the Services, to the extent such loss or delay was caused by any act or omission of the EPC Contractor under the EPC Contract. The O&M Contractor shall not be liable to the Project Company under the O&M Agreement in respect of any loss of the Project Company if and to the extent that the Project Company has claimed and recovered such loss from the EPC Contractor under the EPC Contract. Insurance The O&M Contractor shall obtain and maintain in full force and effect during the Term: (a) professional indemnity insurance; (b) employer's liability insurance; (c) third party liability insurance; and (d) automobile liability insurance, in accordance with the requirements of Applicable Law, the relevant provision under the O&M Agreement, Prudent Utility Practices and the Financing Agreements. The Lenders will have the right to be paid proceeds from any claim payable to the Project Company. Parent Company Guarantee The O&M Contractor shall obtain (at its own cost) and provide to the Project Company on or before the Effective Date, a parent company guarantee from the O&M Contractor's Parent Company Guarantor together with a legal opinion in relation to such document in a form agreed by the Project Company. Liquidated Damages Liquidated Damages for Poor Performance The O&M Contractor undertakes that in each Contract Year following the second (2nd) anniversary of Facility Provisional Acceptance Date and for the term of the O&M Agreement the Plant will meet the Guaranteed Performance Ratio. If, in any such 162
  172. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Contract Year, the Actual Performance Ratio is less than the Guaranteed Performance Ratio, the O&M Contractor shall within twenty eight (28) Business Days of the end of such Contract Year pay or allow to the Project Company performance liquidated damages subject to the Project Company not being entitled to recover such performance liquidated damages from the O&M Contractor if and only if such performance liquidated damages have been fully paid to the Project Company from the EPC Contractor under the EPC Contract. Performance Bonus As of the second (2nd) anniversary of the Facility Provisional Acceptance Date, for over-performance of the availability and the Guaranteed Performance Ratio of the Plant, the O&M Contractor will be entitled to an annual performance bonus in accordance with the O&M Agreement. The performance bonus will be paid if the calculated Actual Performance Ratio in any such Contract Year exceeds the Expected Performance Ratio. Dispute resolution The O&M Agreement is governed by the laws of Malaysia. In the event of any dispute, a party may serve on the other a notice of dispute and the parties shall meet any attempt to resolve the dispute in good faith within thirty (30) days of the date of provision of such notice. Any dispute, controversy or claim arising out of or relating to the O&M Agreement that cannot be resolved amicably shall be settled by arbitration in accordance with the Rules of Arbitration of the Kuala Lumpur Regional Centre for Arbitration. 7.6.4 Project Land Lease Agreements 7.6.4.1 Project Land Lease Agreement (Kedah) The following section incorporates the key terms and conditions that are contained in the Project Land Lease Agreement (Kedah). In respect of defined terms in this Section 7.6.4.1 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Project Land Lease Agreement (Kedah). Overview Pursuant to the Principal Lease Agreement (Kedah) dated 19 June 2017 entered into between TH Mestika and the two (2) registered proprietors of the Kedah Land, the two (2) registered proprietors (the “Principal Lessors”) has agreed to lease the Kedah Land to TH Mestika and TH Mestika has agreed to accept the lease of the Kedah Land upon the terms and conditions contained therein (the “Principal Lease”). The Principal Lease under the Principal Lease Agreement (Kedah) shall commence on the date of the Principal Lease Agreement (Kedah) and shall expire on the date falling on the thirtieth (30th) year from the date of the Principal Lease Agreement (Kedah). Pursuant to the Project Land Lease Agreement (Kedah) dated 7 November 2016 163
  173. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum entered into between TH Mestika as the lessor (the “Lessor”) and QSP (Kedah) as the lessee (the “Lessee”) which has been replaced by the Amended and Restated Project Land Lease Agreement (Kedah) dated 19 June 2017 entered into between the aforementioned parties (the “Project Land Lease Agreement (Kedah)”), the Lessor has agreed to lease the Kedah Land to the Lessee and the Lessee has agreed to accept the lease of the Kedah Land upon the terms and conditions contained therein (the “Lease”). The Lease shall expire on the date falling on the twenty third (23rd) anniversary of the Commencement Date under the Project Land Lease Agreement (Kedah). The Project Land Lease Agreement (Kedah) came into full force and effect on 7 November 2016. Lease Term The Lease under the Project Land Lease Agreement (Kedah) shall commence on the date falling five (5) business days after the date on which all the conditions precedent to the commencement of the Lease as set out below have been fulfilled or waived by the Lessor or the Lessee, as the case may be (“Commencement Date”). The Lease shall expire on the date falling on the twenty third (23rd) anniversary of the Commencement Date. Conditions Precedent to the Commencement of the Lease The Lease shall only be effective and enforceable upon the fulfilment or waiver (by both the Lessor and the Lessee or either of the parties having the right to waive any such condition as provided under the Project Land Lease Agreement (Kedah)) of all of the following conditions: a) the Lessee having completed the Power System Study (PSS) to assess the suitability of the Kedah Land with regards to the connectivity to the national grid as required by the Commission and TNB; b) the Lessee having obtained an unconditional written approval from TNB confirming that the location of the Kedah Land is suitable for the undertaking of the Project by the Lessee; c) the Lessee having obtained an unconditional written approval from the Commission confirming that the Commission has approved for the Project to be undertaken on the Kedah Land; d) the Lessee having executed the PPA with TNB and the PPA is in full force and effect and all conditions precedent to the effectiveness of the PPA (other than the effectiveness of the Project Land Lease Agreement (Kedah)) are satisfied or waived thereunder; e) the Lessee having obtained, at its sole cost and expense and with the Lessor providing all necessary assistance, a written confirmation or waiver from the Appropriate Authority confirming that the Lessee is permitted to undertake the Project on the Kedah Land based on the existing category of land use stated in the document of title of the Kedah Land (“Land Use Approval”). Where the Appropriate Authority determines that a conversion of the existing category of 164
  174. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum land use is required for the Project to be undertaken on the Kedah Land, the Lessee, having obtained at its costs and expense, with the Lessor providing all necessary assistance, a written approval from the Appropriate Authority approving the conversion of the existing category of land use to the relevant category of land use required to undertake the Project (“Land Use Conversion Approval”); f) the Lessee having obtained, at its sole cost and expense and with the Lessor providing all necessary assistance, the planning approval from the Appropriate Authority for the undertaking of the Project on the Kedah Land; and g) the Lessor having obtained at its sole cost and expense, the written consent from the Nominee Purchaser’s Chargee, as the case may be, consenting to (i) the grant of the Nominee Purchaser’s Power of Attorney where the Kedah Land is subject to a charge by the Proprietor’s Chargee; (ii) the lodgement of a private caveat on the Kedah Land by the Lessee in accordance with the Project Land Lease Agreement (Kedah); and (iii) the registration of the Lease in the name of the Lessee as sub-lessee on the document of title of the Kedah Land (excluding the Substation Area if the Lessee has exercised the option under the relevant provision in the Project Land Lease Agreement (Kedah) respect of “Sub-Division Option”) in accordance with the Project Land Lease Agreement (Kedah), as evidenced by the submission of a certified true copy of such consent to the Lessee. It is acknowledged and agreed that this condition precedent shall be waived by the Lessee if the Lessor is able to provide documentary evidence to the Lessee confirming that the Kedah Land is no longer subject to any charge by the Proprietor’s Chargee or the Lessor’s financiers. Lease Rental Subject to the terms and conditions of the Project Land Lease Agreement (Kedah), the lease rental as set out below shall be paid monthly by the Lessee to the Lessor. Lease Rental At a montly amount to be calculated based on the following rates: Years of the Term Annual Lease Rental Per Acre 1st, 2nd, 3rd and 4th RM4,000.00 th th th th 5 , 6 , 7 and 8 RM4,400.00 9th, 10th, 11th and 12th RM4,840.00 13th, 14th, 15th and 16th RM5,324.00 17th, 18th, 19th and 20th RM5,856.00 st nd rd 21 , 22 and 23 RM6,442.04.00 Year of the Extended Annual Lease Rental Per Term Acre 24th onwards RM7,086.24.00 Security Deposit Upon the achievement of the Commencement Date, the Lessee shall provide to the Lessor the security deposit in the form of a bank guarantee as set out in the Project 165
  175. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Land Lease Agreement (Kedah) (“Bank Guarantee”) as security for the due and punctual performance by the Lessee of its obligations under the Project Land Lease Agreement (Kedah). Sub-division Option The Lessor grants and the Lessee accepts an option, exercisable by the Lessee at any time during the Term to require the Lessor to: (a) sub-divide the Kedah Land so as to obtain a separate document of title for the Kedah Land upon which the substation is constructed (“Substation Area”); and (b) sell the Substation Area, free from all Encumbrances (other than the Lease created under the Project Land Lease Agreement (Kedah)) to the Lessee, or if requested by the Lessee, to TNB at a purchase price of Ringgit Five (RM5.00) per square foot, provided that upon the Lessee exercising such option for purpose of the construction of the substation, the Lease Rental to be payable by the Lessee to the Lessor shall be calculated based on a reduced land area equivalent to the Substation Area due to the sub-division and sale of the Substation Area. Delivery of Vacant Possession Vacant possession of the Kedah Land must be delivered by the Lessor to the Lessee no later than five (5) days from the date on which the Commencement Date is achieved, as notified by the Lessee to the Lessor. Assignment and Novation The Lessee shall be entitled without the Lessor’s approval to assign any or all of the Lessee’s rights under the Project Land Lease Agreement (Kedah): i) to the Financing Parties as security; and ii) to TNB pursuant to the requirements of the PPA. For the avoidance of doubt, the Lessor’s prior approval is only required if the Lessee is to assign any or all of the Lessee’s rights under the Project Land Lease Agreement (Kedah) to third parties other than the Financing Parties and TNB and any such approval required from the Lessor shall not be unreasonably withheld by the Lessor. Termination or Forfeiture Termination Due to Non-Fulfilment of CPs If any of the CPs for Lease is not fulfilled or waived by the CPs Long Stop Date, Extended CPs Long Stop Date or Further Extended CPs Long Stop Date, as applicable despite all reasonable efforts by the Parties, the relevant Party who is entitled to waive such CPs for Lease as stipulated in the Project Land Lease Agreement (Kedah) shall be entitled to issue a written notice to the other Party to terminate the Project Land Lease Agreement (Kedah) wherein the Project Land 166
  176. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Lease Agreement (Kedah) shall be deemed terminated on the date such notice is received by such other Party. Termination by the Lessor The Project Land Lease Agreement (Kedah) shall not be terminated nor forfeited by the Lessor for so long as the PPA remains effective, unless the Lessee fails to pay the Lease Rental to the Lessor for a period of five (5) months. Termination by the Lessee Events of termination If: a) the Lessor fails to: i) deliver vacant possession of the Kedah Land; ii) fulfil any of its covenants ; and/ or iii) take all necessary action to remedy any breach of the Project Land Lease Agreement (Kedah) within thirty (30) days from the service of any written notice by the Lessee complaining of such breach; b) the Lessor enters into liquidation whether compulsorily or voluntarily otherwise than for the purpose of amalgamation or reconstruction or has a receiver appointed in respect of all or any part of its assets or has a court order, judgment or decree obtained against it and such order, judgment or decree is not effectively stayed expeditiously; or c) the Lease granted under the Project Land Lease Agreement (Kedah) is not registrable under the National Land Code 1965 for any reason, then and in any such event the Lessee is entitled, without prejudice to any other rights and remedies available to it, to terminate the Project Land Lease Agreement (Kedah) by notice in writing to the Lessor. Consequences of Termination Upon the termination of the Project Land Lease Agreement (Kedah), i) if vacant possession of the Kedah Land has been provided to the Lessee, the Lessee shall quit and deliver up vacant possession of the Kedah Land to the Lessor (other than the Substation Area if the Lessee has exercised the option under the relevant provision in the Project Land Lease Agreement (Kedah) respect of “Sub-Division Option”); ii) the Lessor shall: A) if applicable, refund any advance Lease Rental payments made by the Lessee without interest after deducting the Lease Rental for the proportionate period of the Lease up to the date of termination; and 167
  177. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum B) return the Bank Guarantee submitted by the Lessee, after which neither Party will have any claim against the other Party save for antecedent breach; iii) the Lessee shall, at the cost and expense of the Lessor, remove the Lessee’s Plant and debris from the Kedah Land; iv) if the Project Land Lease Agreement (Kedah) is terminated before the Commercial Operation Date, the Lessor shall pay to the Lessee an amount of compensation that reimburses the Lessee for all of the costs it has incurred and/or is committed to incur up to the date of termination in the design, development, financing (including any payments to the Financing Parties), construction, installation of the Lessee’s Plant, including all the penalties imposable by TNB and which the Lessee is liable to pay under the PPA or any other Malaysian governmental authority; and v) if the Project Land Lease Agreement (Kedah) is terminated after the Commercial Operation Date, the Lessor shall pay the Lessee the remaining value of the Lessee’s Plant, provided further that such compensation shall at a minimum be equal to the remaining debt incurred by the Lessee to fund the development, construction, installation, commissioning and operation of the Lessee’s Plant. Termination due to earlier termination of the PPA a) In the event that the PPA is earlier terminated, the Lessee shall notify the Lessor of the same in writing and the Lessor irrevocably acknowledges and agrees that the Lessee shall be entitled to, either: i) continue using the Kedah Land for other purpose which the Lessee deems fit provided that the Lessee continues to pay the Lease Rental to the Lessor; ii) sub-lease the Kedah Land to other third parties on terms and conditions which are deemed fit by the Lessee; iii) request that the Lessor assist to lease the Kedah Land to other third party(ies) (“New Lessee”) wherein: A) the Lessor shall procure that the New Lessee enters into a new lease agreement (“New Lease”) with the Lessor on terms and conditions to be mutually agreed with the Lessee, which terms shall include among others, the amount of lease rental payable by the New Lessee, the termination of the Project Land Lease Agreement (Kedah) if the New Lease is for a duration covering the remaining period of the Lease hereunder; B) if the amount of lease rental under the New Lease is lower than the prevailing Lease Rental, the Lessee shall pay the amount of shortfall in the Lease Rental to the Lessor, provided always that, in negotiating the lease rental payable by the New Lessee, the final lease rental payable by the New Lessee shall be subject to the prior written approval of the Lessee; and 168
  178. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum C) iv) b) if the amount of lease rental under the New Lease is higher than the prevailing Lease Rental, the amount in excess of the Lease Rental shall be paid by the Lessor to the Lessee on monthly basis for the duration of the New Lease; or terminate the Project Land Lease Agreement (Kedah) by issuing a notice of termination of the Project Land Lease Agreement (Kedah) to the Lessor. In the event that the Project Land Lease Agreement (Kedah) is terminated with the Lessee issuing a notice of termination of the Project Land Lease Agreement (Kedah) to the Lessor, the following shall apply: i) the Lessee shall quit and deliver up vacant possession of the Kedah Land to the Lessor (other than the Substation Area if the Lessee has exercised the option under the relevant provision in the Project Land Lease Agreement (Kedah) respect of “Sub-Division Option”); ii) the Lessor shall: A) if applicable, refund any advance Lease Rental payments made by the Lessee without interest after deducting Lease Rental for the proportionate period of the Lease up to the date of termination of the Project Land Lease Agreement (Kedah); and B) return the Bank Guarantee submitted by the Lessee, after which neither Party will have any claim against the other Party save for antecedent breach; iii) the Lessee shall at its own costs and expense, remove the Lessee's Plant and debris from the Kedah Land; and iv) the Lessee shall pay to the Lessor an amount equivalent to the Lease Rental for the period remaining in the Unexpired Term. 7.6.4.2 Project Land Lease Agreement (Melaka) The following section incorporates the key terms and conditions that are contained in the Project Land Lease Agreement (Melaka). In respect of defined terms in this Section 7.6.4.2 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Project Land Lease Agreement (Melaka). Overview Pursuant to the Project Land Lease Agreement (Melaka) dated 10 January 2017 entered into between Yeng Chong as the lessor (the “Lessor”) and QSP (Melaka) as the lessee (the “Lessee”), the Lessor has agreed to lease the Melaka Land to the Lessee and the Lessee has agreed to accept the lease of the Melaka Land upon the 169
  179. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum terms and conditions contained therein (the “Lease”). The Project Land Lease Agreement (Melaka) came into full force and effect on 10 January 2017. Lease Term The Lease under the Project Land Lease Agreement (Melaka) shall commence on the date falling five (5) business days after the date on which all the conditions precedent to the commencement of the Lease as set out below have been fulfilled or waived by the Lessor or the Lessee, as the case may be (“Commencement Date”). The Lease shall expire on the date falling on the day twenty two (22) years and six (6) months after the Commencement Date. Conditions Precedent to the Commencement of the Lease The Lease shall only be effective and enforceable upon the fulfilment or waiver (by both the Lessor and the Lessee or either of the parties having the right to waive any such condition as provided under the Project Land Lease Agreement (Melaka)) of all of the following conditions: a) the Lessee having completed the Power System Study (PSS) to assess the suitability of the Melaka Land with regards to the connectivity to the national grid as required by the Commission and TNB; b) the Lessee having obtained an unconditional written approval from TNB confirming that the location of the Melaka Land is suitable for the undertaking of the Project by the Lessee; c) the Lessee having obtained an unconditional written approval from the Commission confirming that the Commission has approved for the Project to be undertaken on the Melaka Land; d) the Lessee having executed the PPA with TNB and the PPA is in full force and effect and all conditions precedent to the effectiveness of the PPA are satisfied or waived thereunder (wherein this condition forms part of the conditions or requirement for the financing of the Project by the Financing Parties); e) the Lessee shall apply and obtain, at the costs and expense of the Lessee and with the Lessor providing all necessary assistance, a written confirmation or waiver from the Appropriate Authority confirming that the Lessee is permitted to undertake the Project on the Melaka Land based on the existing category of land use stated in the document of title of the Melaka Land (“Land Use Approval”). Where the Appropriate Authority determines that a conversion of the existing category of land use is required for the Project to be undertaken on the Melaka Land, the Lessee shall apply and obtain at the costs and expense of the Lessee, with the Lessor providing all necessary assistance, a written approval from the Appropriate Authority approving the conversion of the existing category of land use to the relevant category of land use required to undertake the Project (“Land Use Conversion Approval”); 170
  180. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum f) the Lessee having obtained, at its sole cost and expense and with the Lessor providing all necessary assistance, the planning approval from the Appropriate Authority for the undertaking of the Project on the Melaka Land; and g) the Lessor, having executed and provided to the Lessee a valid and effective power of attorney in the form set out in Project Land Lease Agreement (Melaka) (it being acknowledge that the Lessor agrees to provide such power of attorney within seven (7) days from the date of the Project Land Lease Agreement (Melaka)) and with such power of attorney having been registered at the High Court of Malaysia. Lease Rental Subject to the terms and conditions of the Project Land Lease Agreement (Melaka), the lease rental at the monthly amount of Ringgit Seventy Three Thousand and Four Hundred Fifty and Sen Twenty Five (RM73,450.25) shall be paid by the Lessee to the Lessor monthly. Security Deposit Within fifteen (15) days after the Commencement Date, the Lessee shall deposit with the Lessor the Security Deposit in cash and in the manner as set out in the Project Land Lease Agreement (Melaka) as security for the due and punctual performance by the Lessee of its obligations under the Project Land Lease Agreement (Kedah). Sub-division Option The Lessor grants and the Lessee accepts an option, exercisable by the Lessee at any time during the Term to require the Lessor to: (c) sub-divide the Melaka Land so as to obtain a separate document of title for the Melaka Land upon which the substation is constructed (“Substation Area”); and (d) sell the Substation Area, free from all Encumbrances (other than the Lease created under the Project Land Lease Agreement (Melaka)) to the Lessee, or if requested by the Lessee, to TNB at a purchase price of Ringgit Four Million One Hundred Ninety Two Thousand and Siix Hundred Fifty only (RM4,192,650.00) and with all costs required to sub-divide and transfer the Substation Area to the Lessee or TNB, as applicable being borne by the Lessee, provided that upon the Lessee exercising such option for purpose of the construction of the substation, the Lease Rental to be payable by the Lessee to the Lessor shall be calculated based on a reduced land area equivalent to the Substation Area due to the sub-division and sale of the Substation Area. Delivery of Vacant Possession Vacant possession of the Melaka Land must be delivered by the Lessor to the Lessee in the Original Condition on the date on which the Commencement Date is achieved, as notified either by (i) the Lessee to the Lessor or the (ii) the Lessor to the Lessee, whichever is earlier. 171
  181. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Assignment and Novation The Lessee shall be entitled without the Lessor’s approval to: i) assign any or all of the Lessee's rights under the Project Land Lease Agreement (Melaka) as security to the Financing Parties; and ii) assign any or all of its rights under the Project Land Lease Agreement (Melaka) to TNB or a substantial portion thereof when requested by the Lessee. Termination or Forfeiture Termination Due to Non-Fulfilment of CPs If any of the CPs for Lease is not fulfilled or waived by the CPs Long Stop Date, Extended CPs Long Stop Date or Further Extended CPs Long Stop Date, as applicable despite all reasonable efforts by the Parties, the relevant Party who is entitled to waive such CPs for Lease as stipulated in the Project Land Lease Agreement (Melaka) shall be entitled to issue a written notice to the other Party to terminate the Project Land Lease Agreement (Melaka) wherein the Project Land Lease Agreement (Melaka) shall be deemed terminated on the date such notice is received by such other Party. Termination by the Lessor Event of termination In consideration of the relevant provision under the Project Land Lease Agreement (Melaka) in respect of “Obligation to Maintain Security Deposit”, the Lease Agreement (Melaka) shall not be terminated nor forfeited by the Lessor for so long as the PPA remains effective, unless the Lessee fails to pay the Lease Rental to the Lessor for an accumulative period of five (5) months. Consequences of termination Upon the termination of the Project Land Lease Agreement (Melaka) the Lessee shall, a) to the extent it is required by Law, at its own costs and expense, discharge the registered Lease granted to the Lessee under the Project Land Lease Agreement (Melaka); and b) unless otherwise notified in writing by the Lessor, remove the Lessee's Plant at the cost of the Lessee and to peaceably and quietly yield up the Melaka Land (other than the Substation Area if the Lessee has exercised the option under the relevant provision in the Project Land Lease Agreement (Melaka) respect of “Sub-Division Option”) without the requirement for the Lessee to reinstate the Melaka Land (other than the Substation Area if the Lessee has exercised the option under the relevant provision in the Project Land Lease Agreement (Melaka) respect of “Sub-Division Option” to its original condition within three (3) month from the notice of termination received by the Lessee from the Lessor PROVIDED ALWAYS that as far as practically possible, the 172
  182. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Lessee shall not excavate and remove any soil, earth, minerals or other natural resource belonging to the Melaka Land. For the avoidance of doubt, notwithstanding any such written notification from the Lessor requesting the Lessee not to remove the Lessee's Plant or part thereof from the Melaka Land, any such request shall always be subject to the Lessee's right to decide at its sole discretion on whether the Lessee ultimately is agreeable not to remove the Lessee's Plant or part thereof from the Melaka Land. Termination by the Lessee Events of termination If: a) the Lessor fails to: i) deliver vacant possession of the Melaka Land; ii) fulfil any of its covenants; and/ or iii) take all necessary action to remedy any breach of the Project Land Lease Agreement (Melaka) where: A) if such breach by the Lessor affects any part of the operations of the Lessee's Plant, the Lessor shall remedy such breach within a period of thirty (30) days or such other longer period as may be agreed by the Lessee, failing which the Lessee shall have the right (but not the obligation) at its sole discretion to remedy such breach for and on behalf of the Lessor at the sole costs and expense of the Lessor, which costs and expense shall be immediately payable to the Lessee upon submission of a claim by the Lessee to the Lessor; or B) if such breach by the Lessor does not affect any part of the operations of the Lessee's Plant, the Lessor shall remedy such breach within a period of ninety (90) days or such other longer period as may be agreed by the Lessee, failing which the Lessee shall have the right (but not the obligation) at its sole discretion to remedy such breach for and on behalf of the Lessor at the sole costs and expense of the Lessor, which costs and expense shall be immediately payable to the Lessee upon submission of a claim by the Lessee to the Lessor; b) the Lessor enters into liquidation whether compulsorily or voluntarily otherwise than for the purpose of amalgamation or reconstruction or has a receiver appointed in respect of all or any part of its assets or has a court order, judgment or decree obtained against it and such order, judgment or decree is not effectively stayed expeditiously; or c) the Lease granted under the Project Land Lease Agreement (Melaka) is not registrable under the National Land Code 1965 for any reason, 173
  183. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum then and in any such event the Lessee is entitled, without prejudice to any other rights and remedies available to it, to terminate the Project Land Lease Agreement (Melaka) by notice in writing to the Lessor. Consequences of Termination a) Upon the termination of the Project Land Lease Agreement (Melaka), i) if vacant possession of the Melaka Land has been provided to the Lessee, the Lessee shall quit and deliver up vacant possession of the Melaka Land to the Lessor (other than the Substation Area if the Lessee has exercised the option under the relevant provision in the Project Land Lease Agreement (Melaka) respect of “Sub-Division Option” in accordance with the Project Land Lease Agreement (Melaka) at the costs and expenses of the Lessor; ii) to the extent it is required by Law, at the Lessor's costs and expense, discharge the registered Lease granted to the Lessee under the Project Land Lease Agreement (Melaka); iii) the Lessor must refund: A) if applicable, any advance Lease Rental payments made by the Lessee without interest after deducting the Lease Rental for the proportionate period of the Lease up to the date of termination; and B) the Security Deposit paid by the Lessee with interest at the Default Rate, calculated from the date on which the Security Deposit was deposited with the Lessor up to the date on which the Security Deposit is refunded to the Lessee, after which neither Party will have any claim against the other Party save for any antecedent breach; iv) the Lessee shall, at the cost and expense of the Lessor, remove the Lessee's Plant from the Melaka Land, PROVIDED ALWAYS that as far as practically possible, the Lessee shall not excavate and remove any soil, earth, minerals or other natural resource belonging to the Melaka Land; v) if the Project Land Lease Agreement (Melaka) is terminated before the Commercial Operation Date, the Lessor shall pay to the Lessee an amount of compensation that reimburses the Lessee for all of the costs it has incurred or is committed to incur up to the date of termination in the design, development, financing (including any payments to the Financing Parties), construction, installation of the Lessee's Plant, including all the penalties imposable by TNB and which the Lessee is liable to pay under the PPA or any other Malaysian governmental authority, subject always to any such amount of compensation payable by the Lessor under the relevant provision in the Project Land Lease Agreement (Melaka) not exceeding an amount equivalent to the total 174
  184. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum amount of Lease Rental to be calculated on a pro rata basis for the period commencing from the date of termination of the Project Land Lease Agreement (Melaka) to the date of expiry of the Term (“Unexpired Term”); and vi) if the Project Land Lease Agreement (Melaka) is terminated after the Commercial Operation Date, the Lessor shall pay the Lessee the remaining value of the Lessee's Plant, subject always to any such amount of compensation payable by the Lessor under the relevant provision in the Project Land Lease Agreement (Melaka) not exceeding an amount equivalent to the total amount of Lease Rental for the Unexpired Term. Termination due to earlier termination of the PPA a) In the event that the PPA is earlier terminated, the Lessee shall notify theLessor of the same in writing and the need to terminate the Project Land Lease Agreement (Melaka) and the Project Land Lease Agreement (Melaka) shall be terminated on the date on which the Lessee issues a notice of termination of the Project Land Lease Agreement (Melaka) to the Lessor and the following shall apply: i) the Lessee shall quit and deliver up vacant possession of the Melaka Land to the Lessor and to the extent it is required by Law, discharge the registered Lease granted to the Lessee under the Project Land Lease Agreement (Melaka) in accordance with the Project Land Lease Agreement (Melaka) at the costs and expense of the Lesser; ii) the Lessor must refund: A) if applicable, any advance Lease Rental payments made by the Lessee without interest after deducting Lease Rental for the proportionate period of the Lease up to the date of termination of the Project Land Lease Agreement (Melaka); and B) the Security Deposit paid by the Lessee without interest, after which neither Party will have any claim against the other Party save for any antecedent breach; and iii) b) the Lessee shall at its own costs and expense, remove the Lessee’s Plant from the Melaka Land. In the event the Lessee issues a written notice to the Lessor to terminate the Project Land Lease Agreement (Melaka) at any time before the completion of half of the duration of the Term, which is eleven (11) years and three (3) months (“Half Term”), in addition to (i), (ii) and (iii) above, the Lessor shall be entitled to recover from the Lessee an amount equivalent to 50% of the Lease Rental for the Half Term less the total amount of lease rental which has been paid by the Lessee to the Lessor up to the date of termination of the Project Land Lease Agreement (Melaka) (“Termination Payment”), as more particularly illustrated below: Termination Payment = Y-X 175
  185. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Y = Total amount of Lease Rental for Half Term. X = Total amount of Lease Rental which has been paid by the Lessor to the Lessee as at the date of Termination. 7.6.4.3 Project Land Lease Agreement (Terengganu) The following section incorporates the key terms and conditions that are contained in the Project Land Lease Agreement (Terengganu). In respect of defined terms in this Section 7.6.4.3 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Project Land Lease Agreement (Terengganu). Overview Pursuant to the Principal Lease Agreement (Terengganu) dated 13 December 2015 entered into between the SGOT, LTAWNT, Solartif and EGN Network and as supplemented by the Supplemental Principal Lease Agreement (Terengganu) to be entered into by the aforementioned parties (collectively, the “Principal Lease Agreement (Terengganu)”), SGOT has agreed to alienate the land measuring approximately 242.296 hectares located in Paya Tok Asing, Mukim Merchang, District Marang, State of Terengganu (hereinafter referred to as the “LTAWNT Land”)) to LTAWNT which LTAWNT has, in turn, lease such LTAWNT Land to Solartif and EGN Network in accordance with the terms and conditions contained therein. Pursuant to the Project Land Lease Agreement (Terengganu) dated 7 November 2016 entered into between Solartif and EGN Network (collectively, the “Lessor”) and QSP (Terengganu) as the lessee (the “Lessee”), the Lessor has agreed to sub-lease the land measuring two hundred (200) acres in respect of the LTAWNT Land (“Terengganu Land”) to the Lessee and the Lessee has agreed to accept the sublease of the Terengganu Land for the purpose of the Lessee undertaking the Project on the Terengganu Land upon and subject to the terms and conditions contained therein (the “Lease”). The Project Land Lease Agreement (Terengganu) came into full force and effect on 7 November 2016. Lease Term The Lease under the Project Land Lease Agreement (Terengganu) shall commence on the date falling five (5) business days after the date on which all the conditions precedent to the commencement of the Lease as set out below have been fulfilled or waived by the Lessor or the Lessee, as the case may be (“Commencement Date”). The Lease shall expire on the date falling on the twenty third (23rd) anniversary of the Commencement Date. [The rest of this page has been intentionally left blank] 176
  186. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Conditions Precedent to the Commencement of the Lease The Lease shall only be effective and enforceable upon the fulfilment or waiver (by both the Lessor and the Lessee or either of the parties having the right to waive any such condition as provided under the Project Land Lease Agreement (Terengganu)) of all of the following conditions: a) the Lessee having completed the Power System Study (PSS) to assess the suitability of the Terengganu Land with regards to the connectivity to the national grid as required by the Commission and TNB; b) the Lessee having obtained an unconditional written approval from TNB confirming that the location of the Terengganu Land is suitable for the undertaking of the Project by the Lessee; c) the Lessee having obtained an unconditional written approval from the Commission confirming that the Commission has approved for the Project to be undertaken on the Terengganu Land; d) the Lessee having executed the PPA with TNB and the PPA is in full force and effect and all conditions precedent to the effectiveness of the PPA (other than the effectiveness of the Project Land Lease Agreement (Terengganu)) are satisfied or waived thereunder; e) the Lessee having obtained, at its sole cost and expense and with the Lessor providing all necessary assistance, a written confirmation or waiver from the Appropriate Authority confirming that the Lessee is permitted to undertake the Project on the Terengganu Land based on the existing category of land use stated in the document of title of the Terengganu Land (“Land Use Approval”). Where the Appropriate Authority determines that a conversion of the existing category of land use is required for the Project to be undertaken on the Terengganu Land, the Lessee, having obtained at its costs and expense, with the Lessor providing all necessary assistance, a written approval from the Appropriate Authority approving the conversion of the existing category of land use to the relevant category of land use required to undertake the Project (“Land Use Conversion Approval”); f) the Lessee having obtained the approval from the SGOT and LTAWNT in the form in the Project Land Lease Agreement (Terengganu) as evidenced by the submission of a certified true copy of the approval issued by the SGOT or LTAWNT; g) the Lessor having obtained the original issue documents of title of the Terengganu Land which are issued by the Appropriate Authority, as evidenced by the submission of a certified true copy of the issue documents of title to the Lessee; h) the Lessor, at the cost of the Lessee, having obtained the planning approval from the Appropriate Authority for the undertaking of the Project on the Terengganu Land; and i) the Lessor having procured the Proprietor’s Power of Attorney from LTAWNT and issued the power attorney to the Lessee in accordance with the Project 177
  187. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Land Lease Agreement (Terengganu). Lease Rental Subject to the terms and conditions of the Project Land Lease Agreement (Terengganu), the Lessee shall pay the Lease Rental each quarter of each year in accordance with the Schedule of Payment as set out in the Project Land Lease Agreement (Terengganu). Delivery of Vacant Possession Vacant possession of the Terengganu Land must be delivered by the Lessor to the Lessee no later than five (5) days from the date on which the Commencement Date is achieved, as notified by the Lessee to the Lessor. Assignment and Novation The Lessee shall be entitled without the Lessor's approval to assign any or all of the Lessee's rights under the Project Land Lease Agreement (Terengganu): i) to the Financing Parties as security; and ii) to TNB pursuant to the requirements of the PPA. The Lessee shall notify the Lessor in writing upon any such assignment being made. For the avoidance of doubt, the Lessor's prior approval is only required if the Lessee is to assign any or all of the Lessee's rights under his Agreement to third parties other than the Financing Parties and TNB and any such approval required from the Lessor shall not be unreasonably withheld by the Lessor. Termination or Forfeiture Termination Due to Non-Fulfilment of CPs If any of the CPs for Lease is not fulfilled or waived by the CPs Long Stop Date, Extended CPs Long Stop Date or Further Extended CPs Long Stop Date, as applicable despite all reasonable efforts by the Parties, the relevant Party who is entitled to waive such CPs for Lease as stipulated in the Project Land Lease Agreement (Terengganu) shall be entitled to issue a written notice to the other Party to terminate the Project Land Lease Agreement (Terengganu) wherein the Project Land Lease Agreement (Terengganu) shall be deemed terminated on the date such notice is received by such other Party. Upon such termination, the Project Land Lease Agreement (Terengganu) shall cease to have effect save in respect to the relevant provisions under the Project Land Lease Agreement (Terengganu) in respect of “Confidentiality”, “Dispute Resolution”, “Governing Law” and “Costs” which shall remain valid and binding on the Parties save for any antecedent breach which has been committed by the Parties prior to the date of termination. Termination by the Lessor a) In consideration of the rights conferred on the Lessor under the relevant provisions under the Project Land Lease Agreement (Terengganu) in respect of “Notice of Deduction” and “Obligation to Maintain Security Deposit”, the Project Land Lease Agreement (Terengganu) shall not be terminated nor 178
  188. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum forfeited by the Lessor for so long as the PPA remains effective, unless the Lessee fails to pay the Lease Rental to the Lessor for a continuous period of six (6) months. b) In the event that the Lessor issues a written notice to the Lessee to terminate the Project Land Lease Agreement (Terengganu) due to the prolonged nonpayment of tire Lease Rental by the Lessee for a continuous period of six (6) months and such termination occurs prior to the end of the first year from the Commencement Date, the Lessor shall be entitled to recover from the Lessee an amount equivalent to the Lease Rental for a period of one (1) year less the total amount of Lease Rental which has been paid by the Lessee to the Lessor prior to the date of termination. Termination by the Lessee Events of termination If: a) the Lessor fails to: i) deliver vacant possession of the Terengganu Land; ii) fulfil any of its covenants; and/ or iii) take all necessary action to remedy any breach of the Project Land Lease Agreement (Terengganu) within thirly (30) days from the service of any written notice by the Lessee complaining of such breach; b) the Lessor enters into liquidation whether compulsorily or voluntarily otherwise than for the purpose of amalgamation or reconstruction or has a receiver appointed in respect of all or any part of its assets or has a court order, judgment or decree obtained against it and such order, judgment or decree is not effectively stayed expeditiously; or c) the Lease granted under the Project Land Lease Agreement (Terengganu) is not registrable under the National Land Code 1965 for any reason, then and in any such event the Lessee is entitled, without prejudice to any other rights and remedies available to it, to terminate the Project Land Lease Agreement (Terengganu) by notice in writing to the Lessor. Consequences of Termination Upon the termination of the Project Land Lease Agreement (Terengganu), a) if vacant possession of the Terengganu Land has been provided to the Lessee, the Lessee shall quit and deliver up vacant possession of the Terengganu Land to the Lessor; b) the Lessor shall: i) if applicable, refund any advance Lease Rental payments made by the Lessee without interest after deducting the Lease Rental for the 179
  189. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum proportionate period of the Lease up to the date of termination; and ii) refund the Security Deposit paid by the Lessee, after which neither Party will have any claim against the other Party save for antecedent breach; c) the Lessee shall, at the cost and expense of the Lessor, remove the Lessee's Plant and debris from the Terengganu Land; d) if the Project Land Lease Agreement (Terengganu) is terminated before the Commercial Operation Date, the Lessor shall pay to the Lessee an amount of compensation that reimburses the Lessee for all of the costs it has incurred and/or is committed to incur up to the date of termination in the design, development, financing (including any payments to the Financing Parties), construction, installation of the Lessee's Plant, including all the penalties imposable by TNB and which the Lessee is liable to pay under the PPA or any other Malaysian governmental authority; and e) if the Project Land Lease Agreement (Terengganu) is terminated after the Commercial Operation Date, the Lessor shall pay the Lessee the remaining value of the Lessee's Plant, provided further that such compensation shall at a minimum be equal to the remaining debt incurred by the Lessee to fund the development, construction, installation, commissioning and operation of the Lessee's Plant. Termination due to earlier termination of the PPA a) b) In the event that the PPA is earlier terminated, the Lessee shall notify the Lessor of the same in writing and the Lessor irrevocably acknowledges and agrees that the Lessee shall be entitled to, either: i) continue using the Terengganu Land for other purpose which the Lessee deems fit provided that the Lessee continues to pay the Lease Rental to the Lessor; ii) terminate the Project Land Lease Agreement (Terengganu) by issuing a notice of termination of the Project Land Lease Agreement (Terengganu) to the Lessor. In the event that the Project Land Lease Agreement (Terengganu) is terminated with the Lessee issuing a notice of termination of the Project Land Lease Agreement (Terengganu) to the Lessor, the following shall apply: i) the Lessee shall quit and deliver up vacant possession of the Terengganu Land to the Lessor; ii) the Lessor shall: A) if applicable, refund any advance Lease Rental payments made by the Lessee without interest after deducting Lease Rental for the proportionate period of the Lease up to the date of termination of the Project Land Lease Agreement (Terengganu); and 180
  190. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum B) refund Security Deposit paid by the Lessee, after which neither Party will have any claim against the other Party save for antecedent breach; and iii) c) 7.6.5 the Lessee shall at its own costs and expense, remove the Lessee’s Plant and debris from the Terengganu Land within thirty (30) days from the date of the notice of termination or such other period as may be reasonably determined by the Lessee. Notwithstanding the foregoing, if there is an amount(s) owing by the Lessor to the Lessee, the Lessor shall immediately pay such outstanding amount to the Lessee, failing which, the Lessee shall not be obliged to remove the Plant and any debris on Terengganu Land. In the event that the Lessee issues a written notice to the Lessor to terminate the Project Land Lease Agreement (Terengganu) in accordance with paragraph (a)(ii) above and such termination occurs prior to the end of the first year from the Commencement Date, the Lessor shall be entitled to recover from the Lessee an amount equivalent to fifty per cent (50%) of the Lease Rental for a period of one (1) year less the total amount of Lease Rental which has been paid by the Lessee to the Lessor prior to the date of termination. Asset Management Agreements In respect of defined terms in this Section 7.6.5 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Asset Management Agreements. The terms of the Asset Management Agreements in respect of each of the Plants are substantially similar and references to “Asset Management Agreement” in this Section 7.6.5 shall refer to each of the Asset Management Agreements, unless otherwise highlighted in this Information Memorandum. Each of the Project Companies has entered into the Asset Management Agreement on 26 October 2016 as the owner (the “Owner”) with Scatec Solar ASA as the asset manager and the agreements were novated by way of the novation agreement dated 29 May 2017 respectively, between Scatec Solar ASA as the old asset manager, the Owner and Scatec Solar Solutions as the new asset manager (the “Asset Manager”), in relation to the performance of asset management and maintenance and administrative services by the Asset Manager for the Projects. The Asset Management Agreements came into full force and effect on 27 October 2016 (“Effective Date”), and the novation to Scatec Solar Solutions became effective on 8 June 2017. The Asset Management Agreement shall remain in full force and effect from the Effective Date until and including the earlier of (A) the expiry or termination of the PPA; and (B) the date on which the Asset Manager ceases to own any shares (whether ordinary shares or preference shares) in QSP Malaysia and the Issuer (the “Term”). 181
  191. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum The Asset Management Services to be provided by the Asset Manager pursuant to the Asset Management Agreement include the following: (a) perform all of the Project Company’s reporting, notice, regulatory and other administrative responsibilities required under and/or in connection with the Project Documents and the Financing Documents; (b) administer the Financing Documents; (c) administer the Project Documents; coordinate and liaise with each counterparty under the Project Documents and arrange for the performance of the Project Company’s obligations thereunder in compliance with the Approved Budgets; and administer and monitor the Project Company’s and each counterparty’s compliance with the Project Documents, which shall include (i) monitoring each counterparty’s performance of its services for the Project, (ii) enforcing compliance (or correcting failures to comply) with the Project Documents and (iii) informing the Project Company and the Project Company’s Representative of any non-compliance which it becomes aware of; (d) (A) during the Operating Term, (i) on or prior to the date that is thirty (30) days prior to the expected date of Taking Over Date in respect of the Fiscal Year that includes the date of Taking Over Date, prepare and finalize, together with the Project Company or the Project Company’s Representatives, an operating budget for the Project for the Fiscal Year that includes the date of Taking Over Date and an operating budget forecast for the five (5) years thereafter and (ii) on or prior to December 1 of each Fiscal Year (or, if Taking Over Date occurs between November 1 and December 31, on or prior to the date of Taking Over Date in respect of the Fiscal Year immediately following the date of Taking Over Patel, prepare and finalize, together with the Project Company or the Project Company’s Representatives, an operating budget for the Project for the immediately following Fiscal Year and an operating budget forecast for the five (5) years thereafter, in the case of each of (i) and (ii) a form and with amounts that comply with the Financing Documents (each, an “Operating Term Approved Budget”): and (B) during the Construction Term, it is understood that the budget attached in the Asset Management Agreement shall comprise the approved budget for the Construction Term (the “Construction Term Approved Budget”, and together with the Operating Term Approved Budget, the “Approved Budgets”) provided that if the parties fail to reach agreement on either of the budgets set out in (A) and/or (B) within the timeframes set out therein, then the Asset Manager shall be entitled to proceed with its obligations under the Asset Management Agreement in accordance with such budget as the Asset Manager may conclude (the “Disputed Budget”) provided that the amount of the Disputed Budget shall never exceed nor reduce the amount of the relevant original budget attached in the Asset Management Agreement with more than ten per cent (10%); and (e) notify the Project Company and the Project Company’s Representative of any variance from the applicable Approved Budget promptly after learning of such variance. During the Construction Term, the Asset Manager will prepare monthly reports comparing actual results and Approved Budgets, and during the Operating Term, the Asset Manager will prepare reports comparing actual results and Approved Budgets on a quarterly basis or otherwise in 182
  192. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum accordance with the reporting requirements under the Financing Documents (to be coordinated, to the extent possible, with the periodic reports to be prepared by the EPC Contractor or the O&M Contractor). At the end of each quarter during the Term, the Asset Manager shall invoice the Project Company for any expense due and payable by the Project Company and the portion of the management fee due with respect to such month, and the Project Company shall make such payment to the Asset Manager in accordance with the terms of the Asset Management Agreement within thirty (30) days of receipt of such invoice. Following the date of achieving Financial Close Date, the Project Company shall pay to Asset Manager the following fees in consideration of the performance of the Asset Management Services in accordance with the terms under the Asset Management Agreement and pay or reimburse the following expenses: (a) Construction Term Fees: For the Construction Term, the Asset Manager shall be paid an annual amount as more particularly set out in the Asset Management Agreement. The Construction Term Management Fee shall be payable in arrears in four (4) equal quarterly installments. It is understood by the Project Company and the Asset Manager that (a) the Management Fee covers all of the Asset Management Services (no additional fees for the performance of the Asset Management Services shall be charged to the Project Company over and above the Management Fee), and (b) the Management Fee is inclusive of all of the Asset Manager’s own general and administrative expenses, salaries, wages, insurance, taxes and all other costs required for the performance of the Asset Management Services. If the Asset Manager, at the request of the Project Company, performs services not contemplated by the Asset Management Services, the fee for such additional services shall be such amounts payable at such times as the Asset Manager and the Project Company shall agree. (b) Operating Term Fees. For each partial or whole Fiscal Year during the Operating Term, the Asset Manager shall be paid an annual amount as more particularly set out in the Asset Management Agreement (per annum prorated to the extent that any Fiscal Year during such Operating Term consists of less than twelve (12) months) (the “Operating Term Management Fee”). The Operating Term Management Fee shall be payable in arrears in four (4) equal quarterly installments; provided that with respect to any partial quarter during the Term, such payment of the Operating Term Management Fee shall be made pro rata based on the number of days in such month. It is understood by the Project Company and the Asset Manager that (a) the Management Fee covers all of the Asset Management Services (no additional fees for the performance of the Asset Management Services shall be charged to the Project Company over and above the Management Fee), and (b) the Management Fee is inclusive of all of the Asset Manager’s own general and administrative expenses, salaries, wages, insurance, taxes and all other costs required for the performance of the Asset Management Services. If the Asset Manager, at the request of the Project Company, performs services not contemplated by the Asset Management Services, the fee for such additional services shall be such amounts payable at such times as the Asset Manager and the Project Company shall agree. It being understood and agreed that the Project Company shall not be obliged to bear or reimburse the Asset Manager for any costs incurred in respect of any such additional services if 183
  193. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum any such costs have not received the prior written consent of the Project Company prior to its incurrence or previously budgeted for. 7.6.6 Asset Management Agreement (Issuer) In respect of defined terms in this Section 7.6.6 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Asset Management Agreement (Issuer). The Issuer has entered into the Asset Management Agreement (Issuer) on 26 October 2016 as the owner (“Owner”) with Scatec Solar ASA as the Asset Manager and the agreement was novated by way of the Novation Agreement (Asset Management Agreement – Issuer) dated 29 May 2017 between the Issuer, Scatec Solar ASA as the old asset manager, and Scatec Solar Solutions as the new asset manager (the “Asset Manager”), in relation to the performance of asset management and maintenance and administrative services for the Projects. The Asset Management Agreement (Issuer) came into full force and effect on 27 October 2016 (“Effective Date”), and the novation to Scatec Solar Solutions became effective on 8 June 2017. The Asset Management Agreement (Issuer) shall remain in full force and effect from the Effective Date until and including the earlier of (A) the expiry or termination of the PPA; and (B) the date on which the Asset Manager ceases to own any shares (whether ordinary shares or preference shares) in QSP Malaysia and the Issuer (the “Term”). Commencing on the Effective Date, and continuing throughout the Term, the Asset Manager shall provide the following Asset Management Services: (a) monitor the operation of the (i) Operating Account and Distribution Account together with the Issuer and (ii) the Project Companies’ Operating Account and Project Companies’ Maintenance Reserve Account together with the Project Companies; (b) process payments for the Issuer and the Project Companies after verifying invoices; (c) perform all reporting, notice, regulatory, and other administration responsibilities required under and/or in connection with the Financing Documents, including the Green SRI Sukuk and the Inter-Company Financing Documents; (d) to prepare and maintain the accounting records in accordance with the Malaysian Financial Reporting Standards and records of operation of the Issuer and the Project Companies including monthly, quarterly, and annual financial and performance reporting.; (e) to coordinate with the company secretary of theIssuer and the Project Companies in relation to secretarial and regulatory corporate fillings; (f) to coordinate with the auditors of the Issuer and the Project Companies during the annual statutory audits; 184
  194. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (g) together with the tax advisors or consultants, prepare and file all tax returns of the Issuer and the Project Companies; (h) supervise and monitor the Service Providers of the Issuer and the Project Companies; (i) prepare, maintain, and monitor the Operating Budgets of the Issuerand the Project Companies; (j) together with the insurance advisor or broker, procure and maintain all required insurances under the Project Documents and the Financing Documents, specifically, the Green SRI Sukuk; (k) to assist the Issuer’s auditors in the computation of financial covenants tests for distribution; (l) together with the Issuer and Project Companies, to liaise with the Facility Agent on permitted investment placements; and (m) to assist the Issuer and Project Companies in all reporting or compliance of applicable laws and regulations (including environmental). Following the date of achieving Financial Close Date, the Issuer shall pay to Asset Manager the following fees in consideration of the performance of the Asset Management Services in accordance with the terms under the Asset Management Agreement (Issuer) and pay or reimburse the following expenses: (a) Construction Term Fees: For the Construction Term, the Asset Manager shall be paid an annual amount as more particularly set out in the Asset Management Agreement (Issuer). The Construction Term Management Fee shall be payable in arrears in four (4) equal quarterly installments. It is understood by the Issuer and the Asset Manager that (a) the Management Fee covers all of the Asset Management Services (no additional fees for the performance of the Asset Management Services shall be charged to the Issuer over and above the Management Fee), and (b) the Management Fee is inclusive of all of the Asset Manager’s own general and administrative expenses, salaries, wages, insurance, taxes and all other costs required for the performance of the Asset Management Services. If the Asset Manager, at the request of the Issuer, performs services not contemplated by the Asset Management Services, the fee for such additional services shall be such amounts payable at such times as the Asset Manager and the Issuer shall agree. (b) Operating Term Fees. For each partial or whole Fiscal Year during the Operating Term, the Asset Manager shall be paid an annual amount as more particularly set out in the Asset Management Agreement (Issuer) (per annum prorated to the extent that any Fiscal Year during such Operating Term consists of less than twelve (12) months) (the “Operating Term Management Fee”). The Operating Term Management Fee shall be payable in arrears in four (4) equal quarterly installments; provided that with respect to any partial quarter during the Term, such payment of the Operating Term Management Fee shall be made pro rata based on the number of days in such month. It is understood by the Issuer and the Asset Manager that (a) the 185
  195. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Management Fee covers all of the Asset Management Services (no additional fees for the performance of the Asset Management Services shall be charged to the Issuer over and above the Management Fee), and (b) the Management Fee is inclusive of all of the Asset Manager’s own general and administrative expenses, salaries, wages, insurance, taxes and all other costs required for the performance of the Asset Management Services. If the Asset Manager, at the request of the Issuer, performs services not contemplated by the Asset Management Services, the fee for such additional services shall be such amounts payable at such times as the Asset Manager and the Issuer shall agree. It being understood and agreed that the Issuer shall not be obliged to bear or reimburse the Asset Manager for any costs incurred in respect of any such additional services if any such costs have not received the prior written consent of the Issuer prior to its incurrence or previously budgeted for. 7.6.7 Asset Management Agreement (Issuer and Project Co) In respect of defined terms in this Section 7.6.7 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Asset Management Agreement (Issuer and Project Co). The terms of the Asset Management Agreements (Issuer and Project Co) in respect of each of the Plants are substantially similar and references to “Asset Management Agreement (Issuer and Project Co)” in this Section 7.6.7 shall refer to each of the Asset Management Agreements (Issuer and Project Co) unless otherwise highlighted in this Information Memorandum. Each of the Project Companies has entered into the Asset Management Agreement (Issuer and Project Co) on 25 May 2017 as the employer (“Employer”) with the Issuer as the principal asset manager (the “Principal Asset Manager”) in relation to the performance of asset management and maintenance and administrative services for the Projects. The Asset Management Agreement (Issuer and Project Co) came into full force and effect on the date on which the Asset Management Agreement (Issuer) came into full force and effect (“Effective Date”). The Asset Management Agreement (Issuer and Project Co) shall remain in full force and effect from the Effective Date until and including the earlier of (A) the expiry or termination of the PPA; and (B) the termination of the Asset Management Agreement (Issuer) (the “Term”). Commencing on the Effective Date, and continuing throughout the Term, the Principal Asset Manager shall provide the following Asset Management Services: (a) monitor the operation of the (i) Operating Account and Distribution Account together with the Issuer and (ii) the Project Companies’ Operating Account and Project Companies’ Maintenance Reserve Account together with the Project Companies; (b) process payments for the Issuer and the Project Companies after verifying invoices; 186
  196. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (c) perform all reporting, notice, regulatory, and other administration responsibilities required under and/or in connection with the Financing Documents, including the Green SRI Sukuk and the Inter-Company Financing Documents; (d) to prepare and maintain the accounting records in accordance with the Malaysian Financial Reporting Standards and records of operation of the Issuer and the Project Companies including monthly, quarterly, and annual financial and performance reporting; (e) to coordinate with the company secretary of the Issuer and the Project Companies in relation to secretarial and regulatory corporate fillings; (f) to coordinate with the auditors of the Issuer and the Project Companies during the annual statutory audits; (g) together with the tax advisors or consultants, prepare and file all tax returns of the Issuer and the Project Companies; (h) supervise and monitor the Service Providers of the Issuer and the Project Companies; (i) prepare, maintain, and monitor the Operating Budgets of the Issuer and the Project Companies; (j) together with the insurance advisor or broker, procure and maintain all required insurances under the Project Documents and the Financing Documents, specifically, the Green SRI Sukuk; (k) to assist the Issuer’s auditors in the computation of financial covenants tests for distribution; (l) together with the Issuer and Project Companies, to liaise with the Facility Agent on permitted investment placements; and (m) to assist the Issuer and Project Companies in all reporting or compliance of applicable laws and regulations (including environmental). Following the date of achieving Financial Close Date, the Project Company shall pay to the Principal Asset Manager the following fees in consideration of the performance of the Asset Management Services in accordance with the terms under the Asset Management Agreement (Issuer and Project Co) and pay or reimburse the following expenses: (a) Construction Term Fees: For the Construction Term, the Principal Asset Manager shall be paid an annual amount as more particularly set out in the Asset Management Agreement (Issuer and Project Co). The Construction Term Management Fee shall be payable in arrears in four (4) equal quarterly installments. It is understood by the Project Company and the Principal Asset Manager that (a) the Management Fee covers all of the Asset Management Services (no additional fees for the performance of the Asset Management Services shall be charged to the Project Company over and above the Management Fee), and (b) the Management Fee is inclusive of all of the Principal Asset Manager’s own general and administrative expenses, salaries, wages, insurance, taxes and all other costs required for the 187
  197. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum performance of the Asset Management Services. If the Principal Asset Manager, at the request of the Project Company, performs services not contemplated by the Asset Management Services, the fee for such additional services shall be such amounts payable at such times as the Principal Asset Manager and the Project Company shall agree. (b) 7.6.8 Operating Term Fees. For each partial or whole Fiscal Year during the Operating Term, the Principal Asset Manager shall be paid an annual amount as more particularly set out in the Asset Management Agreement (Issuer and Project Co) (per annum prorated to the extent that any Fiscal Year during such Operating Term consists of less than twelve (12) months) (the “Operating Term Management Fee”). The Operating Term Management Fee shall be payable in arrears in four (4) equal quarterly installments; provided that with respect to any partial quarter during the Term, such payment of the Operating Term Management Fee shall be made pro rata based on the number of days in such month. It is understood by the Project Company and the Principal Asset Manager that (a) the Management Fee covers all of the Asset Management Services (no additional fees for the performance of the Asset Management Services shall be charged to the Project Company over and above the Management Fee), and (b) the Management Fee is inclusive of all of the Principal Asset Manager’s own general and administrative expenses, salaries, wages, insurance, taxes and all other costs required for the performance of the Asset Management Services. If the Principal Asset Manager, at the request of the Project Company, performs services not contemplated by the Asset Management Services, the fee for such additional services shall be such amounts payable at such times as the Principal Asset Manager and the Project Company shall agree. It being understood and agreed that the Project Company shall not be obliged to bear or reimburse the Principal Asset Manager for any costs incurred in respect of any such additional services if any such costs have not received the prior written consent of the Project Company prior to its incurrence or previously budgeted for. Project Development Agreements In respect of defined terms in this Section 7.6.8 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Project Development Agreements. The terms of the Project Development Agreements in respect of each of the Plants are substantially similar and references to “Project Development Agreement” in this Section 7.6.8 shall refer to each of the Project Development Agreements, unless otherwise highlighted in this Information Memorandum. Each of the Project Companies have entered into the Project Development Agreement on 23 May 2017 with ItraMAS Tech as the project developer (the “Project Developer”) in relation to the performance of the Project Development Services for the development of each of the Projects by the Project Developer. The Project Development Agreement came into full force and effect on 23 May 2017 (the “Effective Date”) and will continue until the earlier of the Commercial Operation Date or the termination of the Project Development Agreement (“Term”). 188
  198. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum During the Term, the Project Developer shall provide the following Project Development Services to the Project Company: (a) to timely secure all the land required to achieve Financial Close by 30 June 2017; (b) to timely secure all authorizations, permits, way-leaves consents and licenses as required by the Project Company’s lenders, TNB and/or any Governmental Authority to achieve Commencement Date by 30 June 2017; (c) to use best efforts to timely secure all authorizations, permits, way-leaves consents and licenses necessary to finance, construct, interconnect to the power grid, build and operate the Project within such relevant time on which each of any such authorizations, permits, way-leaves consents and licenses is required to be obtained by the Project Company so as to achieve the Commercial Operation Date by 31 December 2017; (d) to apply and submit to all relevant authorities the necessary documentation required to obtain all approvals and to prepare, execute and submit on behalf of the Employer all applications, detailed lay-out, development and building plans, instruments, forms and documents whatsoever related to the Project and/or the Plant as may now and from time to time hereafter be required to be submitted to all relevant authorities for such approval and to negotiate and accept such terms and conditions as may be imposed by the relevant authorities; (e) to sign or otherwise execute all applications, plans, instruments and documents whatsoever as may now and from time to time hereafter be required to be submitted to all such appropriate authorities for the approvals and also to communicate, liaise, agree and compromise with any or such relevant authorities on any matters, terms and conditions in connection therewith as the Project Developer may deem fit; (f) subject to the prior written consent from the Project Company, and in consultation with Asset Manager, to negotiate on behalf of the Project Company for the appointment of and enter into such agreements, for and on behalf of the Project Company, as may be required to, appoint contractors, sub-contractors, experts and all such persons necessary, to undertake all design, engineering, procurement, construction and commissioning of the Plant and related interconnection works; (g) in cooperation with Asset Manager to communicate, liaise, negotiate, lead in discussions with any financier for the financing of the Project and/or the Plant and/or with insurers to take out the necessary insurance on the Project Company’s assets as required under the financing terms on behalf of the Project Company and agree on any matters, terms and conditions in connection therewith as the Project Developer may deem fit and execute any such agreements, letters and documents in connection therewith; (h) subject to the prior written consent from the Project Company and in cooperation with the Asset Manager, to select and appoint technical and financial consultants, expert advisors and/or legal counsels for purposes in connection with the Project; 189
  199. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (i) to negotiate on behalf of the Project Company, PPA, Lease Agreement and agreements for the purchase of land required for Plant and the undertaking of the SPP Works, the SPP Interconnection Facility and the SPP Interconnection (as defined under the PPA) and all other contracts affording any person a right to purchase the solar photovoltaic energy generated from the Plant; (j) at the end of each month, provide the Project Company and Asset Manager with a report containing such information as may reasonably be requested by the Project Company and/or the Asset Manager, which shall be agreed in writing by the Project Company, the Asset Manager and the Project Developer; and (k) to manage the Contracts entered into between the Shareholder and third party consultants prior to the execution of the Project Development Agreement. From the Effective Date and throughout the Term, each of the Project Companies shall pay to Project Developer a fixed lump sum project development fee as below (“Project Development Fees”): QSP (Kedah) Payment Date Amount First Tranche Before Financial Close Date RM 9,000,000.00 Second Tranche On Financial Close Date RM 10,974,593.00 Total RM 19,974,593.00 QSP (Terengganu) Payment Date Amount First Tranche Before Financial Close Date RM 7,800,000.00 Second Tranche On Financial Close Date RM 14,609,107.00 Total RM 22,409,107.00 QSP (Melaka) Payment Date Amount First Tranche 190
  200. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Before Financial Close Date RM 10,200,000.00 Second Tranche On Financial Close Date RM 15,554,792.00 Total RM 25,754,792.00 The first tranche of payment of the Project Development Fees shall be paid directly by the Project Company to the relevant contractor, supplier and/or service provider in accordance with the agreed development budgeted cost set out in the Project Development Agreement up to the date on which the Financial Close is achieved. The second tranche of payment of the Project Development Fees shall be the remaining balance of the Project Development Fees which shall be paid by the Project Company directly to the Project Developer on a fixed lump sum bullet payment basis on the date on which the Financial Close is achieved. The Issuer shall pay or reimburse to Project Developer the expenses incurred in relation to the performance of the Project Development Services. 7.6.9 Project Management Agreement (Issuer) In respect of defined terms in this Section 7.6.9 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Project Management Agreement (Issuer). The Issuer has entered into the Project Management Agreement (Issuer) on 23 May 2017 with ItraMAS Tech as the project operator (“Project Operator”) to provide certain Project Operation Services for the operation of the Projects. The Project Management Agreement came into full force and effect on 23 May 2017 (the “Effective Date”) and will subsist until the earlier of the expiry or termination of the PPAs or the termination of the Project Management Agreement (“Term”). The Project Operator shall provide the following Project Operation Services from the Effective Date until the expiry of the Term: (a) oversee the Asset Manager’s Management Agreement; performance pursuant to the Asset (b) on the instruction of the Issuer, communicate and coordinate with the Governmental authorities, local communities affected by the Projects, and the public in general; and (c) assist to procure, maintain, and renew all required Governmental authorities’ approvals and permits. On the Effective Date and throughout the Term, the Issuer shall pay to Project Operator the project operation fee (“Project Operation Fee”), as follows: [The rest of this page has been intentionally left blank] 191
  201. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Period of Project Operation Services Timing for Payment Amount (RM) Initial Fiscal Year (Effective Date and ending on 31 December 2017) Date of commencement of 2nd Fiscal Year RM104,467 On a monthly basis RM125,000 per annum Second Fiscal Year onwards The Project Operation Fee shall be subject to an annual upward adjustment equivalent to the percentage change in the Malaysian Consumer Price Index on January 1 st of each Fiscal Year. The Issuer shall pay or reimburse to Project Operator the expenses incurred in relation to the performance of the Project Operation Services. 7.6.10 Project Management Agreement In respect of defined terms in this Section 7.6.10 only, where the same is not defined elsewhere in this Information Memorandum, the defined terms have the meaning ascribed to them in the Project Management Agreement. The terms of the Project Management Agreements in respect of each of the Plants are substantially similar and references to “Project Management Agreement” in this Section 7.6.10 shall refer to each of the Project Management Agreements, unless otherwise highlighted in this Information Memorandum. Each of the Project Companies has entered into the Project Management Agreement on 23 May 2017 as the employer (“Employer”) with ItraMAS Tech as the project operator (“Project Operator”) to provide certain Project Operation Services for the operation of the Projects. The Project Management Agreement came into full force and effect on 23 May 2017 (the “Effective Date”) and shall continue until the earlier of the expiry or termination of the PPAs or the termination of the Project Management Agreement (“Term”). The Project Operator shall provide the following Project Operation Services from the Effective Date until the expiry of the Term: (a) oversee the Asset Manager’s Management Agreement; performance (b) on the instruction of the Project Company, communicate and coordinate with the Governmental authorities, local communities affected by the Project, and the public in general; and 192 pursuant to the Asset
  202. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (c) assist to procure, maintain, and renew all required Governmental authorities’ approvals and permits. On the Effective Date and throughout the Term, the Project Company shall pay to Project Operator the project operation fee (“Project Operation Fee”), as follows: Period of Project Operation Services Timing for Payment Amount (RM) Initial Fiscal Year (Effective Date and ending on 31 December 2017) On a monthly basis RM104,467 Second Fiscal Year onwards On a monthly basis RM125,000 per annum The Project Operation Fee shall be subject to an annual upward adjustment equivalent to the percentage change in the Malaysian Consumer Price Index on January 1st of each Fiscal Year. The Project Company shall pay or reimburse to Project Operator the expenses incurred in relation to the performance of the Project Operation Services. [The rest of this page has been intentionally left blank] 193
  203. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Section 8 Investment Considerations Each series of the Green SRI Sukuk will carry different risks and all potential investors are strongly encouraged to evaluate each series of the Green SRI Sukuk on its own merit. Recipients of this Information Memorandum are advised to independently evaluate the risks described in this section before making an investment decision. The Green SRI Sukuk is subject to certain risk factors that could adversely affect, amongst others, the business of the Issuer and/or the Project Companies. The risk factors relating to the Green SRI Sukuk and the Projects and its possible mitigating factors which are summarised below do not purport to be comprehensive or exhaustive and are not intended to be a substitute or replacement for an independent assessment of the risk factors that may affect the Green SRI Sukuk. Each investor or prospective investor should carefully conduct his or her independent evaluation of the risks associated with investing in the Green SRI Sukuk. 8.1 Considerations Relating to the Green SRI Sukuk 8.1.1 Rating MARC has assigned a preliminary rating of AA-IS for the Green SRI Sukuk. A rating is not a recommendation to purchase, hold or sell the Green SRI Sukuk. There is no assurance that a rating will remain in effect for any given period of time or that a rating will not be downgraded, suspended or withdrawn entirely by MARC in the future, if, in its judgment, circumstances in the future so warrant. Further, such a rating is not a guarantee of repayment or that there will be no default by the Issuer under the Green SRI Sukuk. In the event that the rating initially assigned to the Green SRI Sukuk is subsequently downgraded, suspended or withdrawn for any reason, no person or entity will be obliged to provide any additional credit enhancement with respect to the Green SRI Sukuk. Any downgrading, suspension or withdrawal of a rating may have an adverse effect on the liquidity and market price of the Green SRI Sukuk. Any downgrading, suspension or withdrawal of a rating will not constitute an Event of Default with respect to the Green SRI Sukuk or an event by itself that warrants the Green SRI Sukuk to be immediately due and payable. 8.1.2 No Prior Market for the Green SRI Sukuk The Green SRI Sukuk comprises a new issue of securities for which there is currently no secondary market. There can be no assurance that such secondary market will develop or, if it does develop, that it will provide the Sukukholders with the liquidity of investments or will continue for the tenor of the Green SRI Sukuk. If a market develops, the market value of the Green SRI Sukuk may fluctuate. Any sale of the Green SRI Sukuk by the Sukukholders in any secondary market which may develop may be at a discount from the original issue price of the Green SRI Sukuk, depending on many factors, including the prevailing interest rates and the market for similar securities. [The rest of this page has been intentionally left blank] 194
  204. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 8.1.3 Suitability of Investments Each potential investor in the Green SRI Sukuk must determine the suitability of its investment in light of its own circumstances. In particular, each potential investor should: 8.1.4 (i) have sufficient knowledge and experience to make a meaningful evaluation of the Green SRI Sukuk, the merits and risks of investing in the Green SRI Sukuk and the information contained in this Information Memorandum; (ii) have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in the Green SRI Sukuk and the impact the Green SRI Sukuk will have on its overall investment portfolio; (iii) have sufficient financial resources and liquidity to bear all of the risks of an investment in the Green SRI Sukuk; (iv) understand thoroughly the terms of the Green SRI Sukuk and be familiar with the behaviour of any relevant indices and financial markets; and (v) be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic and other factors that may affect its investment and its ability to bear the applicable risks. Shariah Compliance Notwithstanding that the Shariah Adviser has provided a Shariah pronouncement on the structure and mechanism of the Green SRI Sukuk, case law in Malaysia indicates that the courts in Malaysia may still examine the issue of whether the Green SRI Sukuk are in compliance with Shariah principles and if held to be non-Shariah compliant, the recoverability of the profit element under the Green SRI Sukuk may be affected. No assurance is given that the confirmation of the Shariah Adviser will not be subject to challenge on grounds that the Green SRI Sukuk is not Shariah compliant. 8.1.5 Market Risk The price of the Green SRI Sukuk in the secondary market may be influenced by numerous factors, including but not limited to, the political, economic, and any other factors that can affect the capital markets, the Projects, the Issuer, the Project Companies, the Shareholder and/or the Equity Provider in general. Adverse economic and financial developments could have a material adverse effect on the market value of the Green SRI Sukuk. 8.1.6 Interest Rate Risk Sukukholders may suffer unforeseen losses due to fluctuations in interest rates. Although the Green SRI Sukuk are Islamic securities which do not pay interest, they 195
  205. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum are similar to fixed income securities and may therefore see their price fluctuate due to fluctuations in interest rates. Generally, a rise in interest rates may cause a fall in bond prices. The Green SRI Sukuk may be similarly affected resulting in a capital loss for the Sukukholders. Conversely, when interest rates fall, bond prices and the prices at which the Green SRI Sukuk are traded may rise. Sukukholders may enjoy a capital gain but profit received may be reinvested for lower returns. 8.1.7 Enforcement and realisation Following the enforcement of the security upon the declaration of an Event of Default, the Sukuk Trustee (on behalf of the Sukukholders) will have recourse to the security provided to secure the Green SRI Sukuk. The realisation value of the security or any part thereof may be adversely affected by numerous factors, including without limitation, general changes in political and economic conditions, changes in governmental rules and regulations, war or acts of violence and other factors which are beyond the control of the Issuer, the Project Companies, the Security Agent and any person or party involved or interested in the Green SRI Sukuk. No assurance can be given that the Security Agent will be in a position to realise the security provided to secure the Green SRI Sukuk for an amount that is sufficient to repay all amounts outstanding in relation to the Green SRI Sukuk. 8.2 Risks Relating to the Issuer 8.2.1 Issuer’s Ability to Meet its Obligations Under the Green SRI Sukuk The Issuer was incorporated in Malaysia on 6 September 2016 under the Companies Act and therefore has no operating history and/or a track record. As at the date of this Information Memorandum, the only activities that the Issuer will engage in are the issuance of Green SRI Sukuk and other activities incidental or related to the foregoing as required under the Project Documents. The Issuer will not engage in any other business activity. The Issuer will therefore only be able to meet its obligations to the Sukukholders and pay amounts due under the Green SRI Sukuk from the repayment of the Project Companies under the Interco Financing Documents. The Project Companies will be depending on their income and revenue generated under the Projects and in particular, the strength of their operation of the Projects to generate positive cashflow. In the event the Issuer fails to pay any amounts due and payable in respect of the Green SRI Sukuk, the Project Companies are obligated to pay such amount which is equivalent to the amount advanced by the Issuer to that Project Company under the relevant Interco Financing Documents, by virtue of the Project Company Guarantees. Upon the declaration of any of the Events of Default, the Project Company Guarantees would be triggered whereupon a claim on all Project Company Guarantees will be made simultaneously. The payments of all amounts due and payable in respect of the Green SRI Sukuk will be the Issuer’s and the Project Companies’ (as the guarantors) obligations and will not be the obligations or responsibilities of, or guaranteed by, the Principal Adviser, the Joint Lead Arrangers, the Joint Lead Managers or any of their respective subsidiary or affiliate, the advisers of the Issuer and/or the Project Companies, the Sukuk Trustee, and any other person involved or interested in the transaction envisaged under the Green SRI Sukuk. None 196
  206. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum of such persons will accept any liability whatsoever to the Sukukholders in respect of any failure of the Issuer to pay any amount due in respect of the Green SRI Sukuk. 8.3 Risks Relating to the Projects 8.3.1 Pre-Completion Risk (a) Cost Overrun The Project Companies have each entered into a fixed price EPC Contract with the EPC Contractor for each of the Projects. Within the specifications of the EPC Contract, the EPC Contractor is expected to bear all cost overruns (up to the liquidated damage ceiling). However, notwithstanding the same, the EPC Contract allows certain adjustments to the contract price in certain limited circumstances and such adjustment may lead to cost overrun which may be required to be borne by the Project Companies. Two point five per cent (2.5%) of the Contract Price as defined in the EPC Contract (hereinafter referred to as the “EPC Contract Price”) has been included as the project contingency to cover any potential cost overruns experienced during the construction stage. Additionally, the Shareholder and/or the Equity Provider are required to provide advances and/or equity contribution to the Issuer of up to Ringgit Fifty Million (RM50,000,00000), to cover any cost overrun and/or any other costs and expenses to complete the Projects, and such amount will be backed by the Contingency BG, in accordance with the Equity Contribution Agreement. (b) Completion Delay The completion risks of the Projects are mainly dependent on the performance of the EPC Contractor in completing the same in accordance with the agreed dates in order for the Project Companies to meet the Scheduled Commercial Operation Date for the Plants under the PPAs. If the EPC Contractor fails to achieve the actual Commercial Operation Date by 31 December 2017, the EPC Contractor shall be liable to pay the Project Company liquidated damages at the rate of Ringgit One Hundred and Sixteen Thousand Six Hundred and Sixty Seven (RM116,667.00) (“Delay Liquidated Damages”) for each day of delay up to the occurrence of the actual Commercial Operation Date of the Plants. The Issuer believes that the Delay Liquidated Damages are generally in line with the current market conditions. The amount of Delay Liquidated Damages payable by the EPC Contractor under the EPC Contract would be sufficient to reimburse the Project Company for:(a) the amount of compensation for delay payable by the Project Company to TNB under the PPA which is at the rate of Ringgit Fifty Thousand (RM50,000.00) per day for each day of delay from the Scheduled Commercial Operation Date of the Plants until the earlier of (i) the Commercial Operation Date of the Plants; (ii) the date on which the PPAs is terminated by TNB in accordance with the provisions of 197
  207. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum the PPAs; and (iii) one hundred and eighty (180) days after the Scheduled Commercial Operation Date of the Plants; (b) the unavoidable fixed costs that needs to be paid by the Project Company regardless whether the Commercial Operation Date is achieved, which includes the profit payments payable under the respective Interco Financing Documents, the fees payable under the Project Land Lease Agreements, the PMAs, the AMAs, other management expenses, recurring fees relating to the financing and financing service of approximately Ringgit Malaysia Sixty Thousand (RM60,000.00) per day. In addition, the aggregate liability of the EPC Contractor to pay the Delay Liquidated Damages is capped at fifteen per cent (15%) of the EPC Contract Price, which amounts to over Ringgit Fifty Million (RM50,000,000.00) for each of the Project Company. In this regard, each of the Project Company’s liability for delay compensation to TNB in respect of such delay under the PPA is capped at Ringgit Nine Million (RM9,000,000.00). Separately, if any of the Project Companies abandon the Project (as described in the PPA) after the Effective Date under the PPA, the PPA provides that the Project Company must pay compensation to TNB in an amount equal to Ringgit Nine Million (RM9,000,000.00). In turn, if the EPC Contractor has abandoned the works under any of the EPC Contracts, the Project Company is entitled to terminate the EPC Contract and may make a demand under the performance bond(s) provided by the EPC Contractor as required under the EPC Contracts (being an amount equal to ten per cent (10%) of the EPC Contract Price). Further, during the construction period, the Project Companies will procure the delay in start up insurance cover amounting to Ringgit Forty Nine Million One Hundred Eighty Thousand and Nine Hundred Fifty Nine (RM49,180,959.00) for the Project in Gurun, Ringgit Forty Five Million Eight Hundred Thirty Three Thousand and Eight Hundred Ninety Four (RM45,833,894.00) for the Project in Jasin and Ringgit Forty Nine Million Seven Hundred Fifty Three Thousand and One Hundred Forty Seven (RM49,753,147.00) for the Project in Merchang. For more information, please refer to Section 7.4.3 (iii) (Project Insurance – Delay In Start Up) of this Information Memorandum. (c) Other Completion Delays Delays in achieving the Commercial Operation Date of the Plants could also arise due to the failure of the construction works for the Projects, which may arise due to: (i) the failure by TNB to inspect or endorse without reasonable cause the interconnection protective devices referred to in the PPA within fourteen (14) days of receipt by TNB of the certificate by the independent engineer issued in accordance with the PPA; or (ii) the failure of TNB to accept the required generation to enable the testing of the Plant in accordance with the PPA; or 198
  208. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (iii) a delay in the Initial Operation Date by the Grid System Operator for more than fifteen (15) days from the Initial Operation Date as proposed by the Project Company in accordance with the PPA, as a result of any constraint or interruption in the Grid System including the Grid System Operator’s failure to issue the confirmation notice for the commencement of the energisation and commissioning of the SPP Works in accordance with the PPA. The Scheduled Commercial Operation Date of the Plant shall be extended by one (1) day for each day the Commercial Operation Date of the Plant is delayed as a result of the occurrence of any of the events referred to in paragraphs (i), (ii) or (iii) above. The Project Company will be entitled to declare the Commercial Operation Date on the Scheduled Commercial Operation Date of the Plant if it is able to meet the requirements of the PPA to make that declaration notwithstanding such delay caused by TNB. If the Commercial Operation Date of the Plants does not occur by the respective Scheduled Commercial Operation Date due to the default of the Project Companies, its contractors or agents under the PPAs, the Project Companies are liable to pay delay compensation to TNB under the PPAs. (d) Force Majeure during Construction Force majeure provisions are found in the PPAs and other Project Documents. A force majeure event in the PPAs means an event, condition, or circumstance or its effect, which is beyond the reasonable control of the parties and occurs without fault or negligence on the part of the party claiming it. Such an event would result in delay or disruption in the performance of obligation under the affected agreements despite all reasonable efforts of the party claiming it to prevent it or mitigate its effects. There is a risk that the Project Companies may be adversely affected by a force majeure event either directly or indirectly if the other project counterparties to the affected agreements are relieved of their contractual obligations thereunder. Under the terms of the PPAs, the Project Company is able to extend the Scheduled Commercial Operation Date of the Plant by one (1) day for each day the relevant Commercial Operation Date is delayed by a force majeure event affecting the Project Company and the Project Company shall not in any way be entitled to make any claims from TNB during the continuance of such force majeure event affecting the Project Company. Furthermore, if a force majeure event affecting TNB occurs before the Commercial Operation Date and delays the occurrence of the Commercial Operation Date past its Scheduled Commercial Operation Date, TNB shall pay the Project Company the costs of servicing debt after the date such force majeure event occurred and any other unavoidable costs that the Project Company reasonably incurred during such duration to the extent the Project Company is not entitled to receive insurance proceeds which reimburse it for such costs incurred and provided that the total liability of TNB in respect of such payment shall not in any event exceed Ringgit One Hundred and Thirty 199
  209. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Six Thousand Seven Hundred and Sixty Seven and Sen Twelve (RM136,767.12) under the Power Purchase Agreement (Kedah), Ringgit One Hundred and Twenty Six Thousand Seven Hundred and Ninety Four and Sen Fifty Two (RM126,794.52) under the Power Purchase Agreement (Melaka) and Ringgit One Hundred and Thirty Eight Thousand One Hundred and Ninety One and Sen Seventy Eight (RM138,191.78) under the Power Purchase Agreement (Terengganu), for each day during the continuance of the force majeure event. (e) Change in Law Adjustment To the extent a change in law occurs after the date of the PPA which compels the Project Company to make any material capital improvement or other material modification to the Plant, the cost of which is in excess of Ringgit Five Hundred Thousand (RM500,000.00) in any calendar year, that is required for the purpose of enabling the Project Company to fulfil its obligations under the PPA in compliance with such change, TNB and the Project Company shall determine, in good faith and subject to the approval of the Commission, any extension of the Term or any adjustment to the Energy Rate to reflect such cost in excess Ringgit Five Hundred Thousand (RM500,000.00) as may be reasonably incurred by the Project Company in making such improvement or modification and the date from which such adjustment is to be effective. (f) Risks of Liquidated Damages Amount being challenged Whilst the liquidated damages are supported by on-demand performance bonds provided by the EPC Contractor with the liquidated damages level acting as the ceiling to the compensation available, it is possible that the EPC Contractor may challenge the quantum of the liquidated damages payable. There is no assurance that the Project Company will be able to recover reasonable compensation to cover the losses in the event that the amount of compensation is challenged by the EPC Contractor and the courts agree with the EPC Contractor. (g) EPC Contractor Performance and Termination The EPC Contractor has constructed solar photovoltaic plants in various regions worldwide. Although the EPC Contractor has a track record outside of Malaysia in similar projects and is of a certain financial strength, there is no assurance that the EPC Contractor will be able to complete the Projects within the agreed costs, schedule time and deliver the guaranteed performance. However, in the event the EPC Contractor fails to deliver the guaranteed performance, such risks may be mitigated by the performance bond to be obtained by the EPC Contractor under the EPC Contract, which shall remain valid until the issuance of the Facility Provisional Acceptance Certificate (as defined in the EPC Contract) and the parent company guarantee to be provided by Scatec Solar ASA, being the parent company of the EPC Contractor, which will remain valid and enforceable until the expiry of the EPC Contractor's obligations in respect of latent defects in the EPC Contract or seven (7) years after the issuance of the Performance Certificate (as defined in the EPC Contract), whichever is later. Please refer to Section 7.6.2 of this Information Memorandum under the header “Performance 200
  210. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Security” for more information on the performance bond and the parent company guarantee. If the Project Company chooses to terminate the EPC Contract, the aggregate liability of the EPC Contractor to each of the Project Companies is capped at the EPC Contract Price, with specified carve outs from the limit on liability, such as Delay Liquidated Damages and performance liquidated damages. 8.3.2 Post-Completion Risk (a) Offtaker Counterparty Risk Under the PPAs, the Project Companies will have to sell all the solar photovoltaic energy generated by the Plants to TNB and thus making TNB the sole offtaker. TNB currently has a monopoly in the transmission and distribution of electricity in the country. The risk associated with such monopoly is that the expected revenue stream of the Project Companies will depend on the ability of TNB to make timely payments as the Project Companies’ revenue are principally derived from Energy Payments payable by TNB under the PPAs. Therefore, the Project Companies bear the risks of depending solely on the credit quality of a single buyer. To the extent that TNB’s future power purchase obligations are compromised, there could be a material adverse effect on the Project Companies’ ability to meet their payment obligations to the Issuer under the Interco Financing Documents which in turn would have a material adverse effect on the Issuer’s ability to meet its payment obligations under the Green SRI Sukuk. However, TNB being one of the largest companies listed on Bursa Malaysia Securities Berhad, has consistently enjoyed a stable rating outlook. The table below sets out TNB’s credit ratings as published on TNB’s website as at 4 June 2017: Local Rating Agency International Rating Agency Issuer Rating RAM Rating Services Berhad (RAM) Malaysian Rating Corporation Berhad (MARC) (b) Issuer Rating AAA Stable Standard & Poor's Rating Services (S&P) BBB+ Stable AAA AAA ID Stable Moody's Investors Service (Moody's) A3 Stable Resource Risk The Project Companies will derive almost all of their revenues from the net electrical output generated by the Plants, whereby TNB is obliged to accept all net electrical output generated by the Plants up to the maximum annual allowable quantity, subject to certain exclusions as outlined in Section 7.6.1 “Power Purchase Agreements” above. However, the net electrical output generated by the Plants are exposed to resource risk, as solar irradiance is an intermittent resource and may be subject to weather conditions. 201
  211. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum To account for the inherent uncertainties in estimating the annual electricity production, the Issuer has modelled these uncertainties based on probability distributions that are denoted in P-numbers. A P50 value indicates that at any given year there is a fifty per cent (50%) probability the production estimates will be exceeded. The base case financial model is based on P90 numbers, meaning there is a ninety per cent (90%) probability that the production estimates will be exceeded in any given year. A P90 production number is a conservative estimate of annual production levels and on average ranges from seven per cent (7%) to fifteen per cent (15%) below the maximum annual allowable quantity stipulated in the PPAs for the three (3) Project Companies. To derive the Projects’ production numbers, the satellite derived data from the SolarGIS database was used to assess the solar resource at the three (3) Projects’ Sites. SolarGIS’ database provides hourly data from 1999 to 2015 with a high spatial resolution, and is widely used in the industry. The validations of the SolarGIS data from meteorological stations in similar locations further indicates that the data from SolarGIS is more conservative than the data from the meteorological stations. Overall, the usage of P90 production values, combined with the meteorological data, adequate validation of ground source data in the region moderate the uncertainties with regards to the resource risk for the Project Companies. (c) Plants Performance Under the terms of the PPAs, the Project Companies shall furnish TNB with the declared annual quantity of such contract year. The declared annual quantity will be declared annually to TNB at least three (3) months in advance. If the total net electrical output delivered by the Plant in a contract year is less than seventy per cent (70%) of the declared annual quantity of such contract year, the Project Company is liable to pay the non-delivery payment calculated in accordance with the PPA. The abovementioned may occur in the event, for example, the Plant malfunctions or if unusually low irradiance or some other act of God which prevents the Plant from functioning properly. To mitigate such risk, the declared annual quantity will be calculated based on the O&M Contractor’s experience with local solar resource and the Plant’s accurate performance levels from the Commercial Operation Date. The Project Companies have the discretion to determine the declared annual quantity annually and are expected to declare a declared annual quantity based on its P50 estimate for its first (1st) year of operations. Under the EPC Contract, the EPC Contractor has guaranteed certain performance targets at completion. If the EPC Contractor has not achieved the performance criteria for the following measurement periods, the EPC Contractor shall pay the Project Company performance liquidated damages (“Performance Liquidated Damages”), calculated in accordance with the formula set out in the EPC Contract. The Performance Liquidated Damages are capped at ten per cent (10%) of the EPC Contract Price and the Performance Liquidated Damages have to be 202
  212. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum supported by a warranty bond representing five per cent (5%) of the EPC Contract Price issued by the EPC Contractor. The Issuer believes that the Performance Liqudated Damages cap of ten per cent (10%) is in line with market standard. (d) Operations and Maintenance Risk There are a number of operational factors that can lead to reduced revenue, penalties and/or increased costs to the each of the Project Companies. These include, for example, flooding, fluctuating solar irradiation from year to year, unscheduled grid downtime and equipment breakdown. The Project Companies will take out the relevant insurance to insure against the operations and maintenance risks. In addition, for the risks relating to an equipment breakdown, such risks may be mitigated by the equipment warranties to be procured by the EPC Contractor under the EPC Contract from the relevant subcontractor, supplier or equipment supplier (including any original equipment manufacturer) for the various components with the warranties for the corresponding time periods (from the facility provisional acceptance date), as follows: (i) (ii) (iii) (iv) module performance warranty of thirty (30) years; module limited product warranty of ten (10) years; inverter standard warranty of five (5) years, which will be extended by the Project Companies for the duration of the PPAs; and substructures warranties of five (5) years. The operations and maintenance of the Plants may be affected by latent damages. To address such risk, the EPC Contractor guarantees against any defects during the latent defect period, whereby the EPC Contractor will be under an obligation to make good any defects within sixty (60) days from the date the Project Company issues the facility provisional acceptance certificate. Further, the O&M Contractor has been the operational and maintenance contractor in several solar photovoltaic power plants in various regions worldwide. This global expertise, coupled with real-time performance monitoring will allow the O&M Contractor to put in place a robust maintenance plans to maximise availability. In addition, the insurance program and contractual performance guarantees further protects the Issuer against operational and maintenance risks. After the Commercial Operation Date of the relevant Plant, the funds in the Project Company Maintenance Reserve Account (as described in the section entitled “Details of designated accounts, if applicable” of the PTC) will be utilised for scheduled major maintenance and/or scheduled major overhaul of the relevant Plant after the Commercial Operation Date of the Plant, in accordance with the consolidated annual budget. (e) Flood Risk The Sites may be subject to flood risk due to the topography of the Sites. The Issuer has carried out flood studies for each of the Sites. The methodology employed is in line with the Urban Stormwater Management Manual for Malaysia, and it has modelled both 1-in-50-years and 1-in-100 203
  213. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum year flood events, as well as climate change effects. The Issuer believes the employed methodology appropriately models the flood risks to the Projects. The detailed flood modelling further allowed the Issuer to devise appropriate design mitigation measures against flood, some of which are highlighted below:  Gurun: A diversion will be provided to divert the two (2) watercourses traversing the Site to the public drain in the southeast corner of the Site.  Merchang: The Site level will be raised and road flood embankment will be constructed around the Site that is higher than the 1-in-100 year flood levels. In addition there will be diversions to divert incoming floodwater from two (2) watercourses crossing the Site safely to the open drain located in the western edge of the Site.  Jasin: Flood risk is low as the Site topography shows the overall elevation of the area is higher when compared to the surrounding watercourses. With the necessary design measures to mitigate flooding, the Issuer believes the flood risk is low for all three (3) Sites. (f) Force Majeure Risk If either party is rendered unable by reason of force majeure to perform, wholly or in part, any obligation set out in the PPA, those obligations shall be suspended or excused to the extent their performance is affected by such event. If a force majeure event affecting the Project Company occurs after the Commercial Operation Date of the Plants, such force majeure event does not relieve TNB of its obligation to make Energy Payments to the Project Company to the extent that the solar photovoltaic energy is delivered to TNB in accordance with the PPA. On the other hand, if a force majeure event affects TNB occurs after the Commercial Operation Date of the Plants, TNB shall continue to make the non-acceptance payments calculated in accordance with the PPA, to the Project Company, to the extent that the Project Company is capable of generating and delivering solar photovoltaic energy to TNB in accordance with the PPA. (g) PPA Termination Payment If TNB terminates the PPA due to an event of default by the Project Company, TNB has the option, but not the obligation to purchase the Project in accordance with the terms of the PPA. In the event that no payment is forthcoming from TNB, the Sukukholders may not be able to realise their securities. However, this risk may be mitigated by the fact that for as long as the Plants are contributing towards electricity generation from renewable energy sources, it is less likely that TNB will not exercise its option to purchase. 204
  214. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (h) Adequacy of Insurance Coverage Each of the Project Companies is required to maintain insurance policies to mitigate certain risk in accordance with the provisions of the PPA. It is a condition precedent to the issuance of the Green SRI Sukuk that the Project Companies procure a confirmation from the Insurance Adviser that the construction phase insurance/takaful contracts and reinsurance/retakaful arrangements then required to be in effect under the terms of the Transaction Documents are in full force and effect. The report from the Insurance Adviser will also include the following confirmations: (i) that the coverage of the insurance/takaful contracts and reinsurance/retakaful arranged complies with all the Project Documents and are based on standard and acceptable insurance market practice for risks of similar nature; and (ii) the financial strength of the insurance company/takaful operator. However, there can be no assurance that there will be sufficient coverage to adequately protect against interruption to business, generation of revenue, increased expenditure or any other liabilities associated with the business of the Project Companies. (i) Adjustment of Energy Rate The Energy Rate adjustment set out in Section 7.6.1 above under the header “Adjustment of Energy Rate” contains a detailed mechanism giving TNB and the Commission rights to adjust the Energy Rate. This risk that the Energy Rate may be adjusted is mitigated to a degree by: (a) The presence of provisions in the PPAs to ensure that any adjustments to the Energy Rate shall not impact the ability of the Project Company to meet its debt service payment, financial covenants appearing in the Transaction Documents and/or the minimum finance service cover ratio, otherwise such adjustment shall be deferred to such later date and at such rate as approved by the Commission so as to ensure that the debt service payment, financial covenants appearing in the Transaction Documents and/or the minimum finance service cover ratio in the initial financial model or updated financial model to the extent relating to the Project remain unaffected. (b) Any downward adjustment to the Energy Rate shall not be deferred beyond the seventeen (17th) anniversary of the Commercial Operation Date, by which time the Green SRI Sukuk would have been fully redeemed. (c) It is a term of the Green SRI Sukuk that the Project Companies shall not agree to any adjustment to the Energy Rate under the PPAs in the event such adjustment will result in the FSCR (Without Cash) (as defined in the PTC) falling below 1.15 times. 205
  215. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (j) Adjustment of Inaccurate Meters In the event the metering equipment fails to register, or if the measurement made by the metering equipment is found upon testing to be inaccurate by more than +/-1%, the PPA provides for adjustments of the measurements of the inaccurate or defective metering device for billing purposes. Any downward adjustments to the measurements will result in lower Energy Payments to the Project Companies and will have an adverse effect on the revenue of the Project Companies which in turn will have an adverse effect on the ability of the Issuer to meet its obligation to pay the amounts due in respect of the Green SRI Sukuk. 8.3.3 Technology Risk Each of the Project Companies is required to meet certain performance standards in accordance with the requirements set out in the PPAs, which is dependent on each of the components of the Plant operating in accordance with its specifications. The Project Companies’ exposure to this risk is mitigated as all major components of the Plants are sourced from experienced suppliers with market-standard warranties. Components for a solar farm are typically fixed with no moving parts and hence, the reliability and durability of the components may be considered better compared to coal fired power plants. In addition, the Project Companies will take out comprehensive machinery insurance during operation phase, and the Plants will be maintained by an experienced O&M Contractor for the duration of the Green SRI Sukuk. Below is a summary of the assessment of certifications and warranties for the main components of the Plant:  Modules: The selected module complies with the requisite product quality standards and the product warranty is in line with industry practice. The ten (10) year product warranty guarantees that module be free from defects in design, materials, workmanship or manufacturer and conform to the specifications and drawings. The thirty (30) year performance warranty guarantees that the actual power output declines no more than zero point five per cent (0.5%) per year. The thirty (30) years performance warranty is longer than the standard industry warranty.  Inverters: The stated inverter technical performance characteristics are suitable for the Projects. It is noted that the inverter also has the added ability to disconnect from the grid if there is a sudden large drop in frequency or voltage or even in an event of islanding. The product warranty’s scope, duration, remedies and exclusion are in line with market standard, and covers inverter repairs and replacements of the defective product with new or reconditioned parts for five (5) years starting on the ninetieth (90th) day after the product delivery date. The Project Companies will extend the inverter warranty for the duration of the PPA, further protecting the project from technology risk.  Transformer: Transformer designs are based on the applicable standard that is suitable for outdoor installation and for tropical conditions. The warranty covers for repairing or replacing the defective product due to design, material or 206
  216. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum workmanship effective for twelve (12) months from the commissioning date or eighteen (18) months from the delivery, whichever is earlier.  8.3.4 Substructure: The mounting structure complies with the relevant design standard. The warranties are in line with market standard, except for the duration, which is longer than market standard. The warranty ensures that the product is free from defects in material and workmanship (a) ten (10) years from the date of shipment for all steel components (b) thirty (30) years for design-related defects and (c) thirty (30) years of galvanised in ambience C3. Risks in relation to the Project Lands (a) Kedah Land (i) Malay Reserve Land The Kedah Land is a Malay reserve land. Pursuant to the Kedah Enactment, only a Malay can deal with the Kedah Land (including receiving the Principal Lease (Kedah) (as defined below) and the SubLease (Kedah) (as defined below). As at the date of this Information Memorandum, TH Mestika and QSP (Kedah) has not been declared as Malay under the Kedah Enactment. TH Mestika and QSP (Kedah) will be required to be declared as Malay under the Kedah Enactment prior to Financial Close. (ii) Registration of Principal Lease and Sub-Lease over the Kedah Land The two (2) registered proprietors of the Kedah Land (as the lessor) and TH Mestika (as the lessee) have entered into the Principal Lease Agreement (Kedah) for the lease over the Kedah Land (the “Principal Lease (Kedah)”). TH Mestika (as the sub-lessor) and QSP (Kedah) (as the sub-lessee) have entered into the Project Land Lease Agreement (Kedah) for the sub-lease over the Kedah Land by TH Mestika to QSP (Kedah) in accordance with the terms of the Project Land Lease Agreement (Kedah) (the “Sub-Lease (Kedah)”) The Principal Lease (Kedah) in favour of TH Mestika and the SubLease (Kedah) in favour of QSP (Kedah) will be created by way of a memorandum of lease and a memorandum of sub-lease as prescribed under the NLC which must be presented for registration at the relevant land registry respectively, prior to Financial Close. Under the NLC, once registered, the Principal Lease (Kedah) and the Sub-Lease (Kedah) will be effective on the date the memorandum of lease and the memorandum of sub-lease were presented for registration at the relevant land registry provided there are no technical or procedural errors. However, there is a risk that the memorandum of lease and/or the memorandum of sub-lease may not be registered in favour of TH Mestika and/or QSP (Kedah) due to technical or procedural errors. In order to prevent any dealings on the Kedah Land pending the registration of the Principal Lease (Kedah) and the Sub-Lease 207
  217. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (Kedah), it is a condition precedent under the Green SRI Sukuk for a private caveat to be lodged by QSP (Kedah) on the Kedah Land. (iii) Land Use The category of land use of the Kedah Land is for agriculture. As at the date of this Information Memorandum, the written confirmation, exemption or waiver indicating that the State Authority (as defined under the NLC) or the relevant state executive council is agreeable that the Kedah Land may be used for purposes of the Project in Gurun, has not been obtained. The written confirmation, exemption or waiver abovementioned is required to be procured before Financial Close. (b) Terengganu Land (i) Document of Title As at the date of this Information Memorandum, the document of title in respect of the Terengganu Land has not been issued. Given that there is no document of title for the Terengganu Land, there can be no assurance that there will not be any restrictions of interest or express conditions on the Terengganu Land endorsed on the document of title to be issued, which may affect the Principal Lease (Terengganu) and/or the Sub-Lease (Terengganu). (ii) Registration of Lease and Sub-Lease over the Terengganu Land LTAWNT (as the lessor) and EGN Network and Solartif (collectively, as the lessees) have entered into the Principal Lease Agreement (Terengganu) which will be supplemented by the Supplemental Principal Lease Agreement (Terengganu) for the lease over the Terengganu Land (the “Principal Lease (Terengganu)”). Subsequently, EGN Network and Solartif (as the sub-lessors) and QSP (Terengganu) (as the sub-lessee) have entered into the Project Land Lease Agreement (Terengganu) for the sub-lease over the Terengganu Land by EGN Network and Solartif to QSP (Terengganu) in accordance with the terms of the Project Land Lease Agreement (Terengganu) (the “Sub-Lease (Terengganu)”). The Principal Lease (Terengganu) and the Sub-Lease (Terengganu) in favour of EGN Network and Solartif, and QSP (Terengganu) will be created by way of a memorandum of lease and a memorandum of sub-lease as prescribed under the NLC which must be presented for registration at the relevant land registry respectively no later than 31 October 2017 (or such longer period as may be agreed upon by the Security Agent in writing). Under the NLC, once registered, the Principal Lease (Terengganu) and the Sub-Lease (Terengganu) will be effective on the date the memorandum of lease and the memorandum of sub-lease were presented for registration at the relevant land registry provided there are no technical or procedural errors. However, there is a risk that the memorandum of lease and/or 208
  218. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum the memorandum of sub-lease may not be registered in favour of EGN Network and Solartif, and/or QSP (Terengganu) due to technical or procedural errors. (c) Melaka Land (i) Registration of Lease and Sub-Lease over the Melaka Land and Charge over Lease and Sub-Lease over the Melaka Land Yeng Chong (as the lessor) and QSP (Melaka) (as the lessee) have entered into the Project Land Lease Agreement (Melaka) for the lease over the Melaka Land (the “Lease (Melaka)”). The Lease (Melaka) in favour of QSP (Melaka) will be created by way of a memorandum of lease as prescribed under the NLC which must be presented for registration at the relevant land registry before Financial Close. Under the NLC, once registered, the Lease (Melaka) and will be effective on the date the memorandum of lease was presented for registration at the relevant land registry provided there are no technical or procedural errors. However, there is a risk that the memorandum of lease may not be registered in favour of QSP (Melaka) due to technical or procedural errors. In order to prevent any dealings on the Melaka Land pending the registration of the Lease (Melaka), it is a condition precedent under the Green SRI Sukuk for a private caveat to be lodged by QSP (Melaka) on the Melaka Land. (ii) Land Use The category of land use of the Melaka Land is for building. As at the date of this Information Memorandum, the written confirmation, exemption or waiver indicating that the State Authority (as defined under the NLC) or the relevant state executive council is agreeable that the Melaka Land may be used for purposes of the Project in Jasin, has not been obtained. The written confirmation, exemption or waiver abovementioned is required to be procured as a condition precedent under the Green SRI Sukuk. (d) Compulsory Land Acquisition The Project Lands may be subject to a compulsory land acquisition by the Government. If a compulsory land acquisition is made in respect of any or all of the Project Lands, the Project Company may be required to relocate the Plant and this will result in an adverse impact on the Projects and the revenue and cashflow of the Project Company and accordingly, the ability of the Issuer to meet its obligation to make payments under the Green SRI Sukuk. [The rest of this page has been intentionally left blank] 209
  219. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum 8.3.5 Regulatory and Environmental Risks (a) Generation Licence Under the Electricity Supply Act, a person who intends to operate a power plant is required to hold an electricity generation licence. The Commission, in issuing such licence, may also impose such conditions as may appear to be requisite or expedient in accordance with the provisions of the Electricity Supply Act. There is no certainty as to the nature of such conditions that may be imposed. Pursuant to the Electricity Supply Act, in the event of a breach of any of such conditions imposed, the Generation Licence may be suspended or revoked by the Commission. Under the PPA, the Project Company is required, prior to the Initial Operation Date, to submit to TNB a certified copy of the Generation Licence. Unless and until such Generation Licences are obtained, the Project Company would not be able to commence generation of solar photovolltaic energy. A delay in obtaining the Generation Licence could result in the Initial Operation Date and consequentially the Scheduled Commercial Operation Date not being met. In such event, it would reduce the revenues and cashflow of the Project Company post-Commercial Operation Date. Under the PPA, TNB is entitled to terminate the PPA in accordance with its terms in the event the Generation Licence is suspended or revoked or terminated or expired due to the Project Company’s default and the Project Company has not caused the same to be reinstated or renewed within the stipulated remedy period. (b) Renewal of Licence/Permit Risks The Project Companies will require various approvals, licences, permits and certificates to operate their businesses and the Plants and will be required to renew these approvals, licences, permits and certificates or to obtain new approvals, licences, permits and certificates from time to time. There will not be any assurance that in the future the relevant authorities will issue or renew any required approvals, licences, permits or certificates in a timely manner or at all. Failure to renew, maintain or obtain the required approvals, licences, permits and certificates may interrupt the operations of the Plants and may have a material adverse effect on the Project Companies’ business, financial condition and results of operations. (c) Environmental and Social Risks The Project Companies, as with all other independent power producers, are subject to environmental legislations, policies and regulations. These include meeting air, water and noise emission standards. The Environmental Quality Act 1974 (“EQA”) specifies tha an Environmental Impact Assessment (“EIA”) is required for “prescribed activities” provided under the EQA. The Projects are not “prescribed activities” under the EQA and therefore, an EIA is not required. The Department of Environment has confirmed in its letter to each of the Project Companies that it has no objection in relation to: (i) the Plant in Gurun, Kedah via its letter dated 7 February 2017; 210
  220. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum (ii) the Plant in Jasin, Melaka via its letter dated 25 January 2017; and (iii) the Plant in Merchang, Terengganu via its letter dated 20 February 2017, subject to the terms and conditions stated therein. However, there can be no assurance that the Project Companies can and will continue to comply with all the terms and conditions in the Department of Environment’s letter of no objection. In addition, the standards imposed by the environmental legislations and regulations may change or otherwise result in the increase in costs or losses of or reductions in revenue to the Project Companies. Non-compliance of the terms and conditions in the Department of Environment’s letter of no objection and any relevant environmental legislations and regulations could also result in the suspension or revocation of the Generation Licences and/or the imposition of fines. 8.3.6 Draft Project Document As at the date of this Information Memorandum, the Supplemental Principal Lease Agreement (Terengganu) has not been executed. There can be no assurance that QSP (Terengganu) will be able to secure the contract on favourable terms or at all. The Supplemental Principal Lease Agreement (Terengganu) is expected to be executed prior to Financial Close and its execution will constitute part of the conditions precedent. 8.4 Risks Relating to the Shareholder and the Equity Provider 8.4.1 The business, operations and/or financial position of the Shareholder and the Equity Provider may affect the ability of the Shareholder and the Equity Provider to inject the equity contribution into the Issuer The Shareholder and/or the Equity Provider are required to provide to the Issuer contributions in the form of equity for the Projects. An adverse effect to the business, operations and/or financial position of the Shareholder and/or the Equity Provider may directly have an adverse effect on the Shareholder’s and/or the Equity Provider’s ability to fulfil its respective obligations under the Equity Contribution Agreement to inject the Equity Amount and/or the Contingency Equity for the Projects, which in turn may have a negative impact on the Projects as a whole. However, the Shareholder and/or the Equity Provider will procure the Equity BG and the Contingency BG in accordance with the Equity Contribution Agreement. 8.5 General Consideration 8.5.1 Forward Looking Statements Certain statements, information, estimates and reports in this Information Memorandum are based on historical data, which may not be reflective of the future results, and others are forward-looking in nature, which are subject to uncertainties and contingencies. All forward-looking statements are based on estimates and assumptions made by the Issuer, the Project Companies, the Shareholder and the 211
  221. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Equity Provider and although each of the board of directors of the Issuer, the Project Companies, the Shareholder and the Equity Provider believes that these forwardlooking statements are reasonable, the statements are nevertheless subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to differ materially from the future results, performance or achievements expressed or implied in such forward-looking statements. In light of these and other uncertainties, the inclusion of forward-looking statements in this Information Memorandum should not be regarded as a representation or warranty by the Issuer, the Project Companies, the Shareholder, the Equity Provider, or its advisers or arrangers, and there can be no assurance, that the plans and objectives will be achieved. A deterioration in the financial condition of the Issuer, the Project Companies, the Shareholder and the Equity Provider could adversely affect the market value of the Green SRI Sukuk and the ability of the Issuer and the Project Companies to make payments under the Transaction Documents relating to the Green SRI Sukuk to which it is a party when due, if at all. 8.5.2 Change in law The issue of the Green SRI Sukuk is based on Malaysian law, tax and administrative practices in effect at the date hereof and have due regard to the expected tax treatment of all relevant statutes under such law and practice. No assurance can be given that Malaysian law, tax or administrative practice will not change after the closing or that such changes will not adversely impact the structure of the transaction and the treatment of the Green SRI Sukuk. 8.5.3 Inherent regulatory risk Regulatory risk is an inherent feature for independent power producers such as the Project Companies. Events such as the imposition of an annual windfall profit levy on independent power producers in Peninsular Malaysia and Sabah in 2008 – which had subsequently been abolished – and the Government’s sporadic attempts to renegotiate power purchase agreements over the years highlight that the power industry, being a concession-based sector, remains vulnerable to regulatory risk. 8.5.4 Political, Economic and Regulatory Risks Adverse developments in the political and economic conditions in Malaysia and other countries in the region could materially affect the financial prospects of the Issuer, the Project Companies. Political and economic uncertainties include risks of war, expropriation, nationalisation, re-negotiation or nullification of existing contracts, changes in interest rates and methods of taxation and currency exchange controls. Investors should note that whilst the Issuer and the Project Companies strive to continue to take effective measures such as prudent financial management and efficient operating procedures, there can be no assurance that adverse political and economic factors will not materially affect the Issuer and the Project Companies, the Shareholder and the Equity Provider. 212
  222. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Section 9 Economy and Industry Overview 9.1 Economic and Financial Developments in the Malaysian Economy in the First Quarter of 2017 Global growth expanded further In the first quarter of 2017, global economic activity expanded further with growth becoming more synchronised across countries. Indicators such as the manufacturing purchasing managers’ index (PMI) and trade growth showed a significant pick-up in economic activity. In particular, the manufacturing PMI recorded the fastest rate of expansion in six years. Manufacturing activity was supported by better performance across the consumer, intermediate and investment goods sectors, suggesting a broad-based expansion in demand from consumers and businesses. Trade for the Asian economies, including Korea, Chinese Taipei and Singapore, recorded doubledigit growth for the first time since 2011, supported mainly by the electrical & electronics (E&E) and commodities sectors. The improvement in growth was observed across both the advanced and emerging market economies. First quarter GDP releases showed higher growth in several economies in Asia and sustained performance in the advanced economies. Looking at the growth components, while the expansion in consumption was sustained, investment activity rose in the advanced economies. This was an important development given the weakness seen in investment particularly in the US since 2Q 2016. More importantly, improvements in investment play a bigger role in driving global trade (Constantinescu et al., 2015). Continued strength in domestic demand in PR China lent further support to global demand, as shown by the double-digit growth in PR China’s imports during the quarter. The rise in demand was generated by both the demand for intermediate goods meant for re-exports and domestic consumption. Asia benefitted from the recovery in global demand amid sustained strength in domestic demand, supported by favourable labour market conditions and infrastructure spending. The Malaysian economy advanced by 5.6% in the first quarter of 2017 The Malaysian economy recorded a higher growth of 5.6% in the first quarter of 2017 (4Q 2016: 4.5%). Private sector activity was higher and remained as the main driver of growth. Growth was further lifted by higher exports, as increased demand for manufactured products led to a strong growth in real exports (9.8%; 4Q 2016: 2.2%). Real imports also increased at a faster rate of 12.9% (4Q 2016: 1.6%) on account of higher growth of capital and intermediate goods. On a quarter-on-quarter seasonallyadjusted basis, the economy recorded a growth of 1.8% (4Q 2016: 1.3%). Domestic demand driven by private activity Domestic demand growth increased to 7.7% in the first quarter of the year (4Q 2016: 3.2%), supported by continued expansion in private sector expenditure (8.2%; 4Q 2016: 5.9%) and the turnaround in public sector expenditure. 213
  223. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Private consumption grew by 6.6% (4Q 2016: 6.1%). Household spending remained supported by continued expansion in employment and wage growth. The implementation of selected Government measures, including the higher amount of Bantuan Rakyat 1Malaysia cash transfers, also provided additional impetus to household spending. Public consumption recorded a stronger growth of 7.5% (4Q 2016: -4.2%) attributed to higher spending on both emoluments and supplies and services. Private investment grew at a robust pace of 12.9% (4Q 2016: 4.9%), following continued capital spending in the services and manufacturing sectors. Investments in machinery and equipment were higher during the quarter, supported by the implementation of several large-scale projects in the manufacturing sector. Business sentiments improved during the quarter amid the better international economic environment and more stable financial markets. Public investment registered a higher growth of 3.2% (4Q 2016: -0.4%), driven mainly by higher spending on fixed assets by public corporations. Gross fixed capital formation (GFCF) rose by 10.0% (4Q 2016: 2.4%), due to a turnaround in public investment and higher private investment growth. The stronger growth in total investment was due to broad-based increases in capital spending in machinery and equipment (21.8%; 4Q 2016: 2.9%), structures (3.8%; 4Q 2016: 2.8%) and other types of assets (1.4%; 4Q 2016: -2.0%). Higher growth across major economic sectors On the supply side, most economic sectors expanded at a faster pace. The improvement in the overall growth was contributed primarily by the turnaround in the agriculture sector and higher growth in the manufacturing and services sectors. 214
  224. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Growth in the agriculture sector rebounded as crude palm oil yields recovered from the negative impact of El Niño. The performance of the sector was also supported by a double-digit expansion in rubber production. In the manufacturing sector, growth was driven mainly by the electronics and electrical segment, in line with the continued favourable global demand for semiconductors. The domestic-oriented industries were supported by the continued demand for food-related products and a rebound in the motor vehicle production. The services sector expanded at a faster pace in the first quarter. Growth in the wholesale and retail sub-sector improved in line with higher household spending. The finance and insurance sub-sector also registered higher growth, supported by improvements in loan growth and capital market activity amid higher issuance of IPOs. Growth in the construction sector was stronger, supported by civil engineering activity in the petrochemical, power plant and transportation segments. In the mining sector, growth moderated on lower crude oil production, particularly in Sarawak and Peninsular Malaysia, as part of the global initiative to reduce oil production. Headline inflation increased due to higher transport prices Headline inflation1 was higher at 4.3% in the first quarter of 2017 (4Q 2016: 1.7%) driven mainly by cost factors. During the quarter, prices of RON95 petrol averaged higher at RM2.23 per litre compared to an average of RM1.73 per litre during its base period in the 1Q 2016. This resulted in significantly higher inflation in the transport category at 16.2% (4Q 2016: -2.6%). Higher domestic fuel prices were primarily an outcome of the increase in global oil prices following OPEC’s agreement to cut production effective 1 January 2017. Inflation in the food and non-alcoholic beverages category was higher at 4.2% (4Q 2016: 3.3%) with the food away from home sub-category registering a growth of 4.0% (4Q 2016: 3.4%). The increase in food inflation was due to shortages in fresh food supplies amid adverse weather conditions, which were also transmitted into the higher prices for food away from home. However, in March 2017, food inflation started to moderate as supply conditions improved. The higher prices for food away from home amidst an increase in rental inflation led to higher core inflation of 2.4% in 1Q 2017 (4Q 2016: 2.1%). However, the transmission of higher prices remained contained. This was reflected in the inflation pervasiveness 2 which remained broadly stable. The limited transmission was attributed partly to the small share of transportation, energy and basic chemicals (10.4%)3 in the production cost of most items in the CPI basket. Domestic production and consumption also have relatively modest import content (about 20% and 6.7%, 1 As measured by the annual change in the Consumer Price Index (CPI). 2 Inflation pervasiveness captures the share of items in the CPI basket which is rising at a given pace. Inflation is more pervasive if a larger number of items are registering a faster rate of price increase. It is useful in distinguishing increases in headline inflation which is driven by relative price changes from general price ones. 3 This share is derived from an analysis of the Input-Output table. 215
  225. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum respectively), containing the pass-through of the weaker ringgit exchange rate to domestic inflation. Less volatile financial markets Volatility in the global financial markets declined, as major developments and events were largely anticipated by market participants. A key policy event was Federal Reserve’s decision to raise the federal funds rate for the second time since December 2015. The normalisation was a widely anticipated move. The Federal Reserve had earlier indicated that an interest rate hike would be appropriate amid continued improvements in employment and inflation data. Most other major central banks remained committed to maintaining an accommodative monetary policy stance until stronger signs of rising inflation emerged while allowing the current phase of economic expansion to be more entrenched. Beyond monetary policy, the much awaited triggering of the Article 504 4 by the UK government also had limited impact on volatility in the financial markets. Markets were nevertheless affected, albeit marginally, by the attempt by the Trump administration to repeal the Affordable Care Act, as evidenced by an increase in the VIX reading on 23 March. Concerns surrounding the Trump administration’s ability to execute the pro-growth policies rose, resulting in a depreciation of the US dollar against major and regional currencies, towards the end of the quarter. The MPC maintained the OPR at 3.00% At the January and March Monetary Policy Committee (MPC) meetings, the MPC maintained the Overnight Policy Rate (OPR) at 3.00%. At the most recent meeting in May, the MPC also maintained the OPR at 3.00%. At this level of the OPR, the stance of monetary policy is accommodative and supportive of economic activity. The Malaysian economy is expected to perform better in 2017 compared to the 4.2% growth in 2016, driven by domestic demand growth and positive contribution from the external sector. The growth in exports is expected to continue to provide support to overall growth, due in part to expectations for faster global growth. Headline inflation is also projected to be higher in 2017, reflecting primarily the pass-through impact of the increase in global oil prices on domestic retail fuel prices. The decision by the MPC to maintain the OPR was based on the assessment that the recent increase in inflation would be transitory. Monetary policy is not the appropriate tool to address cost-push inflation. Going forward, the MPC will monitor closely the degree of spillover of the higher costs to the broader price trends and overall demand conditions. [The rest of this page has been intentionally left blank] 4 Article 50 of the Treaty on European Union is the part of European Union law that sets out the process by which member states may withdraw from the European Union. 216
  226. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Growth of business loans increased significantly from the last quarter The growth of net financing increased to 6.8% in 1Q 2017 (4Q 2016: 5.5%) driven by both the growth in loans extended by the banking system and development financial institutions (DFIs) (1Q 2017: 6.0%; 4Q 2016: 5.3%), and the growth of net outstanding issuances of corporate bonds (1Q 2017: 9.3%; 4Q 2016: 6.1%). Given healthy supply conditions with continued loan disbursements to all segments of borrowers, higher financing activity reflected the improved demand conditions during the quarter. In particular, growth of outstanding business loans increased to 7.1% (4Q 2016: 4.8%), reflecting improvement in both SMEs and other businesses during the quarter. The growth of SME loans increased (1Q 2017: 9.2%; 4Q 2016: 9.0%), with continued expansion in loans extended to the transport, storage and communication; manufacturing; wholesale and retail trade, and restaurants and hotels; and construction sectors. The growth of outstanding household loans continued to moderate to 5.3% (4Q 2016: 5.5%) with broad-based moderation across most loan types. Domestic monetary and financial conditions remained supportive of economic activity Overall domestic monetary and financial conditions remained supportive of economic activity during the period. Bond yields remained stable due to the support from domestic institutional investors that contained the impact of non-resident outflows. Liquidity conditions continued to remain sufficient while stable retail funding costs continued to provide support to private sector financing. Domestic financial system remains resilient Financial stability was sustained despite global uncertainties associated with policy adjustments in some major economies. Credit conditions in the domestic banking system continue to remain conducive for businesses and households amid an economic environment that remains challenging and the higher cost of living. The asset quality and earnings of financial institutions are expected to remain intact as domestic financial intermediation activities continue to be supported by the liquidity buffers of financial institutions. In addition, domestic financial markets demonstrated sound capacity to weather challenges from the more volatile investor sentiments and global developments. (Source: Economic and Financial Developments in Malaysia in the First Quarter of 2017, Press Release dated 19 May 2017, Bank Negara Malaysia) [The rest of this page has been intentionally left blank] 217
  227. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum Section 10 Other Information 10.1 Contingent Liabilities The Issuer and each of the Project Companies are newly incorporated companies and therefore do not have any contingent liabilities. 10.2 Material Litigation As at the LPD, there are no legal claims, demands, lawsuits or litigation (including those pending or threatened) by or against the Issuer or any of the Project Companies, or any proceedings pending or threatened which might materially and adversely affect the position or business of the Issuer, and in particular, any injunctions, winding up orders, any orders relating to the enforcement of judgments or other remedies which may if granted by the court, effectively cause the Issuer or any of the Project Companies to have to cease all or parts of their respective businesses. 10.3 Related Party Transactions As at the LPD, save and except for the relevant Transaction Documents, Interco Financing Documents and the Project Documents, the Issuer and the Project Companies are not involved in any related party transactions. To the best of their knowledge, the Issuer and each of the Project Companies are not involved in any related party transactions that were not at arms’ length. [The rest of this page has been intentionally left blank] 218
  228. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 1 Base Case Cashflow Projections and Sources and Uses of Funds
  229. Quantum Solar Park (Semenanjung) Sdn Bhd Cash flow projections for the financial years ending 31 December 2017 to 31 December 2038 Annual from Annual to Year 1-Jan-16 31-Dec-16 1 1-Jan-17 31-Dec-17 2 (12,516) (237,811) (990,000) (1,240,327) (3,038) (3,038) (12,516) (234,773) (990,000) (1,237,289) - - - - - - - - - - - - - - - - - - - - - 71,969 125,163 53,194 990,000 1,240,327 3,038 3,038 71,969 122,126 53,194 990,000 1,237,289 - - - - - - - - - - - - - - - - - - - - - Units Total Investment Ordinary Share RPS InterCo Financing Total RM '000s RM '000s RM '000s RM '000s Funding Ordinary Share RCPS RCPS (Redeemable) Utilisation of Green SRI Sukuk Proceeds Total RM '000s RM '000s RM '000s RM '000s RM '000s Initial Deposit into FSRA Profit and financing related cost during construction Construction Term Management Fee Paid during Construction (Incl. GST) FSRA Payment Under InterCo from Project Companies Profit and financing related cost from Project Companies Construction Term Management Fee received from Project Companies (Incl. GST) Construction Period Project cashflow 1-Jan-18 31-Dec-18 3 1-Jan-19 31-Dec-19 4 1-Jan-20 31-Dec-20 5 1-Jan-21 31-Dec-21 6 1-Jan-22 31-Dec-22 7 1-Jan-23 31-Dec-23 8 1-Jan-24 31-Dec-24 9 1-Jan-25 31-Dec-25 10 1-Jan-26 31-Dec-26 11 1-Jan-27 31-Dec-27 12 1-Jan-28 31-Dec-28 13 1-Jan-29 31-Dec-29 14 1-Jan-30 31-Dec-30 15 1-Jan-31 31-Dec-31 16 1-Jan-32 31-Dec-32 17 1-Jan-33 31-Dec-33 18 1-Jan-34 31-Dec-34 19 1-Jan-35 31-Dec-35 20 1-Jan-36 31-Dec-36 21 1-Jan-37 31-Dec-37 22 1-Jan-38 31-Dec-38 23 RM '000s RM '000s RM '000s (29,817) (31,063) (1,202) - (29,817) (31,063) (1,202) - - - - - - - - - - - - - - - - - - - - - RM '000s RM '000s RM '000s 29,817 31,063 1,238 - 29,817 31,063 1,238 - - - - - - - - - - - - - - - - - - - - - RM '000s 36 36 - - - - - - - - - - - - - - - - - - - - - 0 Gurun Interest Income InterCo Financing Principal Operating Term Fee During Operation from Project Companies RPS Principal repayment Ordinary Share Refunded Dividend paid RM RM RM RM RM RM '000s '000s '000s '000s '000s '000s 199,575 325,215 13,628 75,721 4,106 174,710 - - 19,752 6,570 475 32,964 19,193 16,425 489 4,910 18,373 16,425 504 5,328 17,435 16,425 519 5,840 16,532 16,425 535 6,407 15,612 16,425 551 6,622 14,717 18,068 567 5,507 13,628 18,068 584 1,067 5,082 12,513 19,710 602 263 5,002 11,330 19,710 620 458 5,625 10,156 21,353 639 484 5,070 8,752 22,995 658 4,825 7,303 22,995 678 4,689 5,832 22,995 698 5,266 4,350 22,995 719 4,828 2,819 22,995 740 5,550 1,278 24,638 763 14,803 785 9,139 22,212 809 20,870 10,040 833 20,768 9,619 858 22,674 4,106 4,521 Jasin Interest Income InterCo Financing Principal Operating Term Fee During Operation from Project Companies RPS Principal repayment Ordinary Share Refunded Dividend paid RM RM RM RM RM RM '000s '000s '000s '000s '000s '000s 201,397 328,185 13,628 75,753 4,147 122,654 - - 19,932 6,630 475 30,321 19,368 16,575 489 1,848 18,541 16,575 504 2,282 17,595 16,575 519 2,878 16,683 16,575 535 981 2,484 15,755 16,575 551 2,435 1,262 14,851 18,233 567 1,245 1,337 13,752 18,233 584 955 2,362 12,627 19,890 602 2,441 11,433 19,890 620 3,277 10,249 21,548 639 2,750 8,832 23,205 658 2,110 7,370 23,205 678 2,060 5,885 23,205 698 3,073 4,389 23,205 719 4,186 2,845 23,205 740 3,930 1,290 24,863 763 12,452 785 7,479 21,817 809 20,639 8,222 833 20,545 7,895 858 21,475 4,147 3,668 Merchang Interest Income InterCo Financing Principal Operating Term Fee During Operation from Project Companies RPS Principal repayment Ordinary Share Refunded Dividend paid Total Revenue RM RM RM RM RM RM '000s '000s '000s '000s '000s '000s 206,561 336,600 13,628 77,812 4,263 129,613 2,307,195 - - 20,443 6,800 475 31,533 176,372 19,865 17,000 489 2,379 119,031 19,016 17,000 504 2,830 117,883 18,046 17,000 519 3,446 116,797 17,111 17,000 535 878 3,030 115,711 16,159 17,000 551 2,594 1,553 113,645 15,232 18,700 567 1,326 1,683 112,599 14,105 18,700 584 1,078 2,689 111,472 12,951 20,400 602 2,874 110,476 11,727 20,400 620 3,562 109,272 10,512 22,100 639 3,006 109,142 9,058 23,800 658 2,354 107,904 7,559 23,800 678 2,309 103,322 6,036 23,800 698 3,354 101,539 4,502 23,800 719 4,293 98,705 2,918 23,800 740 3,707 93,990 1,323 25,500 763 12,885 121,320 785 7,890 22,139 93,032 809 21,149 8,440 91,786 833 21,040 7,884 90,251 858 21,855 4,263 3,662 92,947 Management Service Fees Project Operation fee during construction Tax Input GST Paid (Post COD) Input GST Claimed (Post COD) Output GST Received (Post COD) Output GST Paid (Post COD) RM RM RM RM RM RM RM '000s '000s '000s '000s '000s '000s '000s - - Operations Period Project cashflow RM '000s Financing related cost during Operation Interest on cash balance RM '000s RM '000s Cashflow Available for Debt Service RM '000s Green SRI Sukuk Profit Principal repayment Cashflow post financing facilities Repayment to Project Companies pursuant to FSRA payment Net Increase (-) / Decrease (+) of FSRA Cashflow post reserve accounts RCPS redemption RCPS dividend Ordinary Share Refunded Dividend paid Net cashflow Opening Cash Balance Net cashflow Closing Cash Balance RM '000s RM '000s RM '000s RM '000s RM '000s RM '000s RM RM RM RM '000s '000s '000s '000s RM '000s RM '000s RM '000s RM '000s (47,554) (104) (6,161) (3,404) 3,151 2,453 (2,453) 2,253,159 (9,075) 24,697 0 - 2,268,781 (607,533) (990,000) 0 - 671,248 (29,817) 29,817 0 - 671,248 (53,194) (101,055) (135,413) (381,585) 0 - 0 36 174,420 (417) 1,918 175,921 (1,708) (613) (128) 119 88 (88) 116,701 (430) 2,464 118,736 (1,759) (529) (132) 122 91 (90) 115,585 (442) 1,878 117,021 (1,812) (392) (136) 126 93 (93) 114,583 (456) 1,373 115,501 (1,866) (314) (140) 130 96 (96) 113,521 (469) 1,245 114,297 (1,922) (304) (144) 134 99 (99) 111,409 (483) 1,240 112,165 (1,980) (318) (149) 138 102 (102) 110,291 (498) 1,269 111,062 (2,040) (303) (153) 142 105 (105) 109,119 (513) 1,251 109,857 (2,101) (313) (158) 146 108 (108) 108,051 (528) 1,223 108,746 (2,164) (296) (162) 150 112 (111) 106,800 (544) 1,193 107,449 (2,229) (313) (167) 155 115 (114) 106,589 (560) 1,312 107,341 - (60,128) (20,000) (58,426) (50,000) (55,930) (50,000) (53,076) (50,000) (50,326) (50,000) (47,525) (50,000) (44,800) (55,000) (41,485) (55,000) (38,090) (60,000) (34,490) (60,000) (30,917) (65,000) 10,310 11,090 12,426 13,971 14,639 11,262 13,371 10,656 12,958 11,424 1,153 1,487 1,358 1,382 1,283 1,700 1,778 1,721 11,463 12,578 13,783 15,354 15,922 (6,000) (15,874) (13,000) (5,000) (15,885) (13,000) (5,000) (14,583) (6,500) (5,000) (10,354) - 36 95,793 - (24,484) 36 71,309 - (3,500) (4,327) (6,500) 0 36 56,982 (23,411) (21,307) (12,300) 0 0 0 36 36 36 56,982 57,018 57,018 (23,411) 33,607 33,607 (21,307) 12,300 12,300 (12,300) (0) 0 36 - (1,658) (104) (180) (131) 107 86 (71) 0 (0) 0 (0) (3,397) (2,922) (2,295) (313) (172) 160 118 (118) 105,283 (577) 1,196 105,902 (2,364) (291) (178) 164 122 (121) 100,654 (595) 1,139 101,199 (2,435) (278) (183) 169 126 (125) 98,812 (612) 1,083 (2,508) (266) (188) 174 129 (129) 95,917 (631) 1,029 (2,584) (251) (194) 180 133 (133) 91,142 (650) 982 (2,661) (252) (200) 185 137 (137) 118,392 (669) 764 99,283 96,315 91,474 (17,752) (70,000) (13,241) (70,000) (8,582) (70,000) (3,892) (75,000) 39,595 (26,642) (70,000) (22,232) (70,000) 9,260 8,967 11,531 13,074 12,892 2,178 2,213 2,208 2,322 2,317 118,487 (29,817) 37,520 (2,741) (75) (164) 149 141 (141) 90,201 - (2,823) (13) (169) 154 146 (145) 88,935 - 90,201 - 88,935 - 90,201 - (2,908) (52) (174) 158 150 (149) 87,275 89,441 683 1,457 87,958 90,898 - 88,935 - (2,995) (496) (180) 190 154 (179) 87,958 - 90,898 - 12,962 9,974 12,434 14,679 8,502 11,438 11,180 13,739 15,396 15,209 47,299 90,201 88,935 87,958 (5,000) (6,386) - (5,000) (12,423) - (5,000) (3,735) - (13,694) (55) - (11,130) - (6,305) (5,458) (11,726) (11,180) (13,739) (15,396) (12,974) (49,534) (90,201) (88,935) (30,933) (135,413) (12,509) 4,536 (4,461) 1,240 (1,315) 3,549 (3,261) (288) - - - 2,235 (2,235) - - 57,024 (57,024) 4,536 (4,461) 76 76 1,240 1,315 1,315 (1,315) 0 0 3,549 3,549 3,549 (3,261) 288 288 (288) 0 0 2,235 2,235 2,235 (2,235) 0 0 57,024 57,024 57,024 (57,024) 0 (0) 4,536 4,536 0 - 0 - 0 0 - 0 0 0 - 0 - 0 0 90,898
  230. Quantum Solar Park (Kedah) Sdn Bhd Cash flow projections for the financial years ending 31 December 2017 to 31 December 2038 Annual from Annual to Year Construction Period Uses of Funds EPCC Contract Value Development and Financing Expenses Construction Term Management Fee, Project Operations Fee and Stamp Duty Construction Term Management Fee paid to QSPS Performance Bond & Others Profit during construction BG during construction FSRA payment under InterCo Taxes and GST Total Capex Construction Period Sources of Funds Ordinary Share RPS Utilisation of InterCo Financing Proceeds Total Funding Excess Money for Project Operation Fees at Issuer Units RM '000s RM '000s RM '000s 1-Jan-16 31-Dec-16 1 1-Jan-17 31-Dec-17 2 1-Jan-18 31-Dec-18 3 (344,220) (18,937) (1,831) (652) - (327,009) (18,285) (1,831) (17,211) - - - - - - - - - - - - - - - - - - - - - (1,033) (18,244) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Total RM RM RM RM RM RM RM '000s '000s '000s '000s '000s '000s '000s (389) (182) (8,854) (1,346) (9,854) (21,725) (407,339) (41) (693) (389) (182) (8,854) (1,346) (9,854) (20,651) (388,402) RM RM RM RM '000s '000s '000s '000s 4,106 78,018 325,215 407,339 693 693 4,106 77,325 325,215 406,646 RM '000s 35 - 35 RM '000s 35 - 18,278 Energy Payment Total Revenue RM '000s RM '000s 936,012 936,012 - Operating Costs Total Operating Costs RM '000s RM '000s (173,424) (173,424) Change in Accounts Receivables Change in Accounts Payables - O&M Net Change in Working Capital RM '000s RM '000s RM '000s Tax Input GST Claimed (From Construction Period) Input GST Paid (Post COD) Input GST Claimed (Post COD) Output GST Received (Post COD) Output GST Paid (Post COD) RM RM RM RM RM RM Construction Period Project cashflow Operations Period Project cashflow Interest on cash balance Cashflow Available for Debt Service InterCo Financing Interest Principal repayment Cashflow post financing facilities Repayment from QSPS pursuant to FSRA payment Net Increase (-) / Decrease (+) of MRA Cashflow post reserve accounts RPS redemption Ordinary Share Refunded (At the end of PPA) Dividend paid Net cashflow Opening Cash Balance Net cashflow Closing Cash Balance '000s '000s '000s '000s '000s '000s 0 0 (16,389) 21,725 (10,405) 10,405 56,161 (56,161) 1-Jan-23 31-Dec-23 8 1-Jan-24 31-Dec-24 9 1-Jan-25 31-Dec-25 10 1-Jan-26 31-Dec-26 11 1-Jan-27 31-Dec-27 12 1-Jan-28 31-Dec-28 13 1-Jan-29 31-Dec-29 14 1-Jan-30 31-Dec-30 15 1-Jan-31 31-Dec-31 16 1-Jan-32 31-Dec-32 17 1-Jan-33 31-Dec-33 18 1-Jan-34 31-Dec-34 19 1-Jan-35 31-Dec-35 20 1-Jan-36 31-Dec-36 21 1-Jan-37 31-Dec-37 22 1-Jan-38 31-Dec-38 23 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 47,000 47,000 46,811 46,811 46,623 46,623 46,435 46,435 46,246 46,246 46,058 46,058 45,870 45,870 45,681 45,681 45,492 45,492 45,304 45,304 45,116 45,116 44,927 44,927 43,449 43,449 43,265 43,265 43,082 43,082 42,900 42,900 42,717 42,717 42,533 42,533 42,351 42,351 42,168 42,168 41,985 41,985 - - (6,189) (6,189) (5,920) (5,920) (6,156) (6,156) (6,383) (6,383) (6,543) (6,543) (7,095) (7,095) (7,264) (7,264) (7,518) (7,518) (7,697) (7,697) (7,882) (7,882) (8,173) (8,173) (8,457) (8,457) (8,659) (8,659) (8,867) (8,867) (9,081) (9,081) (9,657) (9,657) (9,884) (9,884) (10,118) (10,118) (10,359) (10,359) (10,714) (10,714) (10,810) (10,810) - - (3,863) 472 (3,391) - - (27) 21,725 (371) 313 2,820 (2,346) - 1,514 - RM '000s 769,473 - - RM '000s 244,683 - RM '000s RM '000s 9,854 - - RM '000s 254,537 - 18,278 18,278 18,278 18,278 - 15 12 27 (2) (355) 354 2,809 (2,811) 26 19 45 (5) (369) 367 2,797 (2,801) 5 19 24 (7) (383) 381 2,786 (2,787) 15 13 29 (10) (393) 391 2,775 (2,777) 15 45 61 (12) (426) 420 2,763 (2,765) 26 13 39 (14) (436) 434 2,752 (2,755) 5 21 27 (17) (451) 448 2,741 (2,741) 15 15 30 (19) (462) 460 2,730 (2,731) 15 15 31 (22) (473) 471 2,718 (2,720) 26 23 49 (24) (490) 488 2,707 (2,710) 5 24 29 (24) (507) 504 2,696 (2,696) 122 16 138 (24) (520) 518 2,607 (2,622) 15 17 32 (434) (532) 530 2,596 (2,598) 25 17 42 (1,965) (545) 543 2,585 (2,588) 5 48 53 (2,026) (579) 574 2,574 (2,575) 15 19 34 (2,097) (593) 591 2,563 (2,565) 15 19 34 (2,183) (607) 605 2,552 (2,554) 25 19 43 (2,183) (622) 619 2,541 (2,544) 6 30 35 (2,135) (643) 639 2,530 (2,531) 3,466 (876) 2,590 (3,159) (649) 756 2,519 (2,944) 41,290 40,913 40,502 40,065 39,719 39,004 38,626 38,170 37,803 37,428 36,962 36,472 34,887 33,993 32,072 31,264 30,765 30,263 29,847 29,350 118 15 25 35 45 55 65 75 85 95 100 100 100 100 100 100 100 87 63 37 12 41,408 40,928 40,527 40,100 39,764 39,059 38,691 38,245 37,888 37,523 37,062 36,572 34,987 34,093 32,173 31,364 30,865 30,350 29,909 29,387 30,301 (19,752) (6,570) (19,193) (16,425) (18,373) (16,425) (17,435) (16,425) (16,532) (16,425) (15,612) (16,425) (14,717) (18,068) (13,628) (18,068) (12,513) (19,710) (11,330) (19,710) (10,156) (21,353) (8,752) (22,995) (7,303) (22,995) (5,832) (22,995) (4,350) (22,995) (2,819) (22,995) (1,278) (24,638) 5,310 5,728 6,240 6,807 7,022 5,907 6,549 5,665 6,483 5,553 4,825 4,689 5,266 4,828 5,550 4,949 30,350 29,909 29,387 30,301 - - - - - - 9,854 - 1,000 1,000 1,000 1,000 15,086 (400) (400) (400) (400) (400) (400) (400) (400) (400) (400) - - - 30,289 - 14,686 4,910 5,328 5,840 6,407 6,622 5,507 6,149 5,265 6,083 5,553 4,825 4,689 5,266 4,828 5,550 14,803 31,350 30,909 30,387 31,301 (32,964) (4,910) (5,328) (5,840) (6,407) (6,622) (5,507) (1,067) (5,082) (263) (5,002) (458) (5,625) (484) (5,070) (4,825) (4,689) (5,266) (4,828) (5,550) (14,803) (9,139) (22,212) (20,870) (10,040) (20,768) (9,619) (22,674) (4,106) (4,521) - - - - - RM '000s RM '000s RM '000s (75,721) (4,106) (174,710) - RM '000s (0) - 18,278 (18,278) (0) - 18,278 18,278 18,278 (18,278) (0) RM '000s RM '000s RM '000s 1-Jan-22 31-Dec-22 7 - 767,958 (199,575) (325,215) 1-Jan-21 31-Dec-21 6 - RM '000s - 1-Jan-20 31-Dec-20 5 (18,244) RM '000s RM '000s RM '000s - 1-Jan-19 31-Dec-19 4 - (0) - (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) - (0) - (0) (0) (0) (0) 0 (0) (0) (0) (0) 0 (0) - (0) - (0) (0) (0) - (0) (0) - (0) (0) - (0) (0) - (0) (0) - (0) (0) - (0) (0)
  231. Quantum Solar Park (Melaka) Sdn Bhd Cash flow projections for the financial years ending 31 December 2017 to 31 December 2038 Annual from Annual to Year Construction Period Uses of Funds EPCC Contract Value Development and Financing Expenses Construction Term Management Fee, Project Operations Fee and Stamp Duty Construction Term Management Fee paid to QSPS Performance Bond & Others Profit during construction BG during construction FSRA payment under InterCo Taxes and GST Total Capex Construction Period Sources of Funds Equity RPS Utilisation of InterCo Financing Proceeds Total Funding Excess Money for Project Operation Fee at Issuer Units RM '000s RM '000s RM '000s 1-Jan-16 31-Dec-16 1 1-Jan-17 31-Dec-17 2 1-Jan-18 31-Dec-18 3 (342,316) (24,453) (1,831) (1,060) - (325,201) (23,392) (1,831) (17,116) - - - - - - - - - - - - - - - - - - - - - (1,027) (18,143) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Total RM RM RM RM RM RM RM '000s '000s '000s '000s '000s '000s '000s (389) (182) (8,943) (1,335) (9,800) (21,875) (411,124) (41) (1,102) (389) (182) (8,943) (1,335) (9,800) (20,807) (391,879) RM RM RM RM '000s '000s '000s '000s 4,147 78,792 328,185 411,124 1,102 1,102 4,147 77,690 328,185 410,022 RM '000s 35 - 35 RM '000s 35 - 18,177 Energy Payment Total Revenue RM '000s RM '000s 889,062 889,062 - Operating Costs Total Operating Costs RM '000s RM '000s (177,835) (177,835) Change in Accounts Receivables Change in Accounts Payables - O&M Net Change in Working Capital RM '000s RM '000s RM '000s Tax Input GST Claimed (From Construction Period) Input GST Paid (Post COD) Input GST Claimed (Post COD) Output GST Received (Post COD) Output GST Paid (Post COD) RM RM RM RM RM RM Construction Period Project cashflow Operations Period Project cashflow Interest on cash balance Cashflow Available for Debt Service InterCo Financing Interest Principal repayment Cashflow post financing facilities Repayment from QSPS pursuant to FSRA payment Net Increase (-) / Decrease (+) of MRA Cashflow post reserve accounts RPS redemption Ordinary Share Refunded (At the end of PPA) Dividend paid Net cashflow Opening Cash Balance Net cashflow Closing Cash Balance '000s '000s '000s '000s '000s '000s 1-Jan-22 31-Dec-22 7 1-Jan-23 31-Dec-23 8 1-Jan-24 31-Dec-24 9 1-Jan-25 31-Dec-25 10 1-Jan-26 31-Dec-26 11 1-Jan-27 31-Dec-27 12 1-Jan-28 31-Dec-28 13 1-Jan-29 31-Dec-29 14 1-Jan-30 31-Dec-30 15 1-Jan-31 31-Dec-31 16 1-Jan-32 31-Dec-32 17 1-Jan-33 31-Dec-33 18 1-Jan-34 31-Dec-34 19 1-Jan-35 31-Dec-35 20 1-Jan-36 31-Dec-36 21 1-Jan-37 31-Dec-37 22 1-Jan-38 31-Dec-38 23 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 44,642 44,642 44,463 44,463 44,285 44,285 44,105 44,105 43,927 43,927 43,747 43,747 43,569 43,569 43,390 43,390 43,211 43,211 43,032 43,032 42,853 42,853 42,674 42,674 41,269 41,269 41,095 41,095 40,922 40,922 40,748 40,748 40,574 40,574 40,400 40,400 40,226 40,226 40,052 40,052 39,879 39,879 - - (6,582) (6,582) (6,308) (6,308) (6,546) (6,546) (6,702) (6,702) (6,863) (6,863) (7,417) (7,417) (7,587) (7,587) (7,763) (7,763) (7,945) (7,945) (8,131) (8,131) (8,424) (8,424) (8,622) (8,622) (8,826) (8,826) (9,036) (9,036) (9,253) (9,253) (9,734) (9,734) (9,964) (9,964) (10,200) (10,200) (10,444) (10,444) (10,694) (10,694) (10,793) (10,793) (0) - - (3,669) 504 (3,165) (12,314) 21,875 (10,670) 10,670 53,344 (53,344) - - (27) 21,875 (395) 333 2,679 (2,228) 720,823 - RM '000s 1,514 - RM '000s 722,336 - (201,397) (328,185) - RM '000s 192,754 - RM '000s RM '000s 9,800 - - RM '000s 202,554 - 18,177 18,177 18,177 18,177 - 15 12 27 (2) (379) 377 2,668 (2,670) 25 19 44 (5) (393) 390 2,657 (2,660) 5 13 18 (7) (402) 400 2,646 (2,647) 15 13 28 (10) (412) 410 2,636 (2,637) 15 45 60 (12) (445) 439 2,625 (2,627) 24 13 38 (14) (455) 454 2,614 (2,617) 5 15 20 (17) (466) 464 2,603 (2,604) 15 15 29 (19) (477) 475 2,593 (2,594) 15 15 30 (22) (488) 486 2,582 (2,584) 24 23 48 (24) (505) 503 2,571 (2,574) 5 17 22 (24) (517) 515 2,560 (2,561) 115 17 132 (24) (530) 528 2,476 (2,490) 14 17 31 (24) (542) 540 2,466 (2,467) 23 17 40 (24) (555) 553 2,455 (2,458) 5 40 45 (1,173) (584) 579 2,445 (2,445) 14 19 33 (1,934) (598) 596 2,434 (2,436) 14 19 34 (2,021) (612) 610 2,424 (2,426) 23 19 42 (2,022) (627) 624 2,414 (2,416) 5 21 27 (1,979) (642) 639 2,403 (2,404) 3,292 (874) 2,418 (2,930) (648) 755 2,393 (2,797) 38,988 38,176 37,772 37,412 37,079 36,372 36,000 35,627 35,273 34,905 34,447 34,047 32,535 32,062 31,680 29,880 28,705 28,208 27,798 27,402 118 15 25 35 45 55 65 75 85 95 100 100 100 100 100 100 100 87 63 37 12 39,106 38,191 37,797 37,447 37,124 36,427 36,065 35,702 35,358 35,000 34,547 34,147 32,635 32,162 31,781 29,980 28,805 28,296 27,860 27,440 28,290 (19,932) (6,630) (19,368) (16,575) (18,541) (16,575) (17,595) (16,575) (16,683) (16,575) (15,755) (16,575) (14,851) (18,233) (13,752) (18,233) (12,627) (19,890) (11,433) (19,890) (10,249) (21,548) (8,832) (23,205) (7,370) (23,205) (5,885) (23,205) (4,389) (23,205) (2,845) (23,205) (1,290) (24,863) 2,248 2,682 3,278 3,866 4,097 2,982 3,717 2,841 3,677 2,750 2,110 2,060 3,073 4,186 3,930 2,653 28,296 27,860 27,440 28,290 - - - - - - 9,800 - 1,000 1,000 1,000 1,000 12,543 (400) (400) (400) (400) (400) (400) (400) (400) (400) (400) - - - 28,277 - 12,143 1,848 2,282 2,878 3,466 3,697 2,582 3,317 2,441 3,277 2,750 2,110 2,060 3,073 4,186 3,930 12,452 29,296 28,860 28,440 29,290 (30,321) (1,848) (2,282) (2,878) (981) (2,484) (2,435) (1,262) (1,245) (1,337) (955) (2,362) (2,441) (3,277) (2,750) (2,110) (2,060) (3,073) (4,186) (3,930) (12,452) (7,479) (21,817) (20,639) (8,222) (20,545) (7,895) (21,475) (4,147) (3,668) - - - - RM '000s RM '000s RM '000s (75,753) (4,147) (122,654) - RM '000s (0) - 18,177 (18,177) (0) - 18,177 18,177 18,177 (18,177) - RM '000s RM '000s RM '000s 1-Jan-21 31-Dec-21 6 - - - 1-Jan-20 31-Dec-20 5 (18,143) RM '000s RM '000s RM '000s - 1-Jan-19 31-Dec-19 4 (0) - - (0) (0) (0) - (0) - (0) (0) 0 0 (0) (0) (0) 0 0 0 0 0 0 (0) (0) (0) (0) (0) (0) (0) (0) 0 (0) (0) (0) (0) 0 (0) - (0) (0) (0) (0) (0) (0) - (0) - (0) (0) (0) - (0) (0) - (0) (0) - (0) (0) - (0) 0 (0) (0) (0) (0) 0 (0)
  232. Quantum Solar Park (Terengganu) Sdn Bhd Cash flow projections for the financial years ending 31 December 2017 to 31 December 2038 Annual from Annual to Year Construction Period Uses of Funds EPCC Contract Value Development and Financing Expenses Construction Term Management Fee, Project Operations Fee and Stamp Duty Construction Term Management Fee paid to QSPS Performance Bond & Others Profit during construction BG during construction FSRA payment under InterCo Taxes and GST Total Capex Construction Period Sources of Funds Equity RPS Utilisation of InterCo Financing Proceeds Total Funding Excess Money for Project Operation Fee at Issuer Construction Period Project cashflow Units RM '000s RM '000s RM '000s 1-Jan-16 31-Dec-16 1 1-Jan-17 31-Dec-17 2 1-Jan-18 31-Dec-18 3 (354,973) (21,328) (1,831) (1,202) - (337,224) (20,126) (1,831) (17,749) - - - - - - - - - - - - - - - - - - - - - (1,065) (18,814) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Total RM RM RM RM RM RM RM '000s '000s '000s '000s '000s '000s '000s (389) (182) (9,179) (1,406) (10,162) (22,414) (421,864) (41) (1,243) (389) (182) (9,179) (1,406) (10,162) (21,308) (401,808) RM RM RM RM '000s '000s '000s '000s 4,263 81,001 336,600 421,864 1,243 1,243 4,263 79,758 336,600 420,621 RM '000s 35 - 35 RM '000s 35 - 18,848 - 1-Jan-19 31-Dec-19 4 1-Jan-20 31-Dec-20 5 1-Jan-21 31-Dec-21 6 1-Jan-22 31-Dec-22 7 1-Jan-23 31-Dec-23 8 1-Jan-24 31-Dec-24 9 1-Jan-25 31-Dec-25 10 1-Jan-26 31-Dec-26 11 1-Jan-27 31-Dec-27 12 1-Jan-28 31-Dec-28 13 1-Jan-29 31-Dec-29 14 1-Jan-30 31-Dec-30 15 1-Jan-31 31-Dec-31 16 1-Jan-32 31-Dec-32 17 1-Jan-33 31-Dec-33 18 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 41,575 41,575 41,397 41,397 41,219 41,219 41,041 41,041 40,863 40,863 (10,176) (10,176) (10,412) (10,412) (10,655) (10,655) (11,176) (11,176) (11,274) (11,274) - 45,743 45,743 45,560 45,560 45,377 45,377 45,194 45,194 45,010 45,010 44,827 44,827 44,644 44,644 44,460 44,460 44,277 44,277 44,093 44,093 43,910 43,910 43,727 43,727 42,287 42,287 42,109 42,109 41,931 41,931 41,753 41,753 Operating Costs Total Operating Costs RM '000s RM '000s (177,369) (177,369) - - (6,226) (6,226) (5,952) (5,952) (6,190) (6,190) (6,346) (6,346) (6,663) (6,663) (7,217) (7,217) (7,387) (7,387) (7,563) (7,563) (7,745) (7,745) (8,118) (8,118) (8,412) (8,412) (8,610) (8,610) (8,814) (8,814) (9,024) (9,024) (9,465) (9,465) (9,946) (9,946) Change in Accounts Receivables Change in Accounts Payables - O&M Net Change in Working Capital RM '000s RM '000s RM '000s (0) (0) - - (3,760) 474 (3,286) Tax Input GST Claimed (From Construction Period) Input GST Paid (Post COD) Input GST Claimed (Post COD) Output GST Received (Post COD) Output GST Paid (Post COD) RM RM RM RM RM RM (12,907) 22,414 (10,642) 10,642 54,660 (54,660) - - (28) 22,414 (374) 315 2,745 (2,283) RM '000s RM '000s 743,169 - 1,518 - Cashflow Available for Debt Service RM '000s 744,687 - InterCo Financing Interest Principal repayment RM '000s RM '000s (206,561) (336,600) 201,526 - 10,162 - - Cashflow post financing facilities RM '000s Repayment from QSPS pursuant to FSRA payment Net Increase (-) / Decrease (+) of MRA RM '000s RM '000s Cashflow post reserve accounts RM '000s 211,688 RPS redemption Ordinary Share Refunded (At the end of PPA) Dividend paid RM '000s RM '000s RM '000s (77,812) (4,263) (129,613) Net cashflow RM '000s Opening Cash Balance Net cashflow Closing Cash Balance RM '000s RM '000s RM '000s - - 18,848 18,848 18,848 18,848 - 1-Jan-38 31-Dec-38 23 - - Operations Period Project cashflow 1-Jan-37 31-Dec-37 22 - 910,997 910,997 Interest on cash balance 1-Jan-36 31-Dec-36 21 - RM '000s RM '000s '000s '000s '000s '000s '000s '000s 1-Jan-35 31-Dec-35 20 (18,814) Energy Payment Total Revenue - 1-Jan-34 31-Dec-34 19 15 12 27 (2) (357) 356 2,734 (2,735) 25 19 44 (5) (371) 369 2,723 (2,726) 5 13 18 (7) (381) 379 2,712 (2,712) 15 26 41 (10) (400) 397 2,701 (2,702) 15 45 61 (12) (433) 427 2,690 (2,691) 25 14 39 (14) (443) 442 2,679 (2,682) 5 15 20 (17) (454) 452 2,668 (2,668) 15 15 30 (19) (465) 463 2,657 (2,658) 15 30 46 (22) (487) 483 2,646 (2,647) 25 24 48 (24) (505) 502 2,635 (2,638) 5 17 22 (24) (517) 515 2,624 (2,624) 118 17 135 (24) (529) 527 2,537 (2,552) 15 17 32 (24) (541) 539 2,527 (2,528) 24 35 60 (24) (568) 564 2,516 (2,519) 5 40 45 (1,521) (597) 592 2,505 (2,506) 15 19 33 (1,983) (611) 608 2,494 (2,496) 15 19 34 (2,073) (625) 622 2,484 (2,486) 24 19 43 (2,075) (639) 637 2,473 (2,476) 5 43 48 (2,021) (671) 665 2,462 (2,463) 3,373 (913) 2,460 (2,979) (676) 788 2,452 (2,866) 40,207 39,629 39,222 38,856 38,374 37,651 37,276 36,897 36,539 35,993 35,517 35,112 33,568 33,090 32,495 30,325 29,445 28,942 28,527 27,886 122 15 25 35 45 55 65 75 85 95 100 100 100 100 100 100 100 87 63 37 12 40,328 39,644 39,247 38,891 38,419 37,706 37,341 36,972 36,624 36,088 35,618 35,212 33,668 33,190 32,595 30,425 29,545 29,029 28,589 27,924 28,781 (20,443) (6,800) (19,865) (17,000) (19,016) (17,000) (18,046) (17,000) (17,111) (17,000) (16,159) (17,000) (15,232) (18,700) (14,105) (18,700) (12,951) (20,400) (11,727) (20,400) (10,512) (22,100) (9,058) (23,800) (7,559) (23,800) (6,036) (23,800) (4,502) (23,800) (2,918) (23,800) (1,323) (25,500) 2,779 3,230 3,846 4,308 4,548 3,409 4,167 3,274 3,962 3,006 2,354 2,309 3,354 4,293 3,707 2,722 29,029 28,589 27,924 28,781 - - - - - - 10,162 - 1,000 1,000 1,000 1,000 13,085 (400) (400) (400) (400) (400) (400) (400) (400) (400) (400) - - - 28,768 - 12,685 2,379 2,830 3,446 3,908 4,148 3,009 3,767 2,874 3,562 3,006 2,354 2,309 3,354 4,293 3,707 12,885 30,029 29,589 28,924 29,781 (31,533) (2,379) (2,830) (3,446) (878) (3,030) (2,594) (1,553) (1,326) (1,683) (1,078) (2,689) (2,874) (3,562) (3,006) (2,354) (2,309) (3,354) (4,293) (3,707) (12,885) (7,890) (22,139) (21,149) (8,440) (21,040) (7,884) (21,855) (4,263) (3,662) (0) (0) 0 (0) 0 0 (0) (0) (0) (0) (0) (0) (0) 0 (0) (0) (0) (0) (0) 0 (0) (0) 0 (0) 0 - 18,848 (18,848) 0 - 18,848 18,848 18,848 (18,848) - (0) - - (0) (0) (0) - (0) (0) (0) (0) (0) - (0) (0) - 0 (0) (0) 0 (0) - - - - - - - - - - - - - 0 0 0
  233. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 2 Assumptions of Base Case Cashflow Projections
  234. Appendix 2-i Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) and its subsidiaries (the “Group”) The cash flow projections of the Group for the financial years ending 31 December 2017 to 31 December 2038 QSPS is the holding company and its subsidiaries are: (i) (ii) (iii) Quantum Solar Park (Kedah) Sdn Bhd (“QSPK”); Quantum Solar Park (Melaka) Sdn Bhd (“QSPMe”); and Quantum Solar Park (Terengganu) Sdn Bhd (“QSPT”). (QSPK, QSPMe and QSPT are collectively referred to as the “Project Companies”) The cash flow projections of the Group for the financial years ending 31 December 2017 to 31 December 2038 were prepared by the management of the Issuer based on: 1. The assumptions made by the management of the Issuer as set out in Appendix III; 2. Power Purchase Agreement dated 3 November 2016 between Tenaga Nasional Berhad and QSPK; 3. Power Purchase Agreement dated 3 November 2016 between Tenaga Nasional Berhad and QSPMe; 4. Power Purchase Agreement dated 3 November 2016 between Tenaga Nasional Berhad and QSPT; 5. Subscription Agreement dated 26 October 2016 between Scatec Solar ASA and QSPS in relation to the redeemable convertible preference shares (“RCPS”) in QSPS; 6. Novation Agreement dated 17 May 2017 between Scatec Solar ASA, QSPS and Scatec Solar Malaysia B.V. in relation to the Subscription Agreement entered into between Scatec Solar ASA and QSPS on 26 October 2016; 7. Subscription Agreement dated 31 May 2017 between QSPK and QSPS in relation to the redeemable preference shares (“RPS”) in QSPK; 8. Subscription Agreement dated 31 May 2017 between QSPMe and QSPS in relation to the redeemable preference shares (“RPS”) in QSPMe; 9. Subscription Agreement dated 31 May 2017 between QSPT and QSPS in relation to the redeemable preference shares (“RPS”) in QSPT; 10. Energy Yield Assessment provided by the Issuer; 11. Engineering, Procurement and Construction Contract dated 28 February 2017 between QSPK and Scatec Solar Solutions Malaysia Sdn. Bhd.; 12. Engineering, Procurement and Construction Contract dated 28 February 2017 between QSPMe and Scatec Solar Solutions Malaysia Sdn. Bhd.; 13. Engineering, Procurement and Construction Contract dated 28 February 2017 between QSPT and Scatec Solar Solutions Malaysia Sdn. Bhd.;
  235. Appendix 2-ii The cash flow projections of the Group for the financial years ending 31 December 2017 to 31 December 2038 were prepared by the management of the Issuer based on (continued): 14. Project Development Agreement dated 23 May 2017 between QSPK and Itramas Technology Sdn. Bhd.; 15. Project Development Agreement dated 23 May 2017 between QSPMe and Itramas Technology Sdn. Bhd.; 16. Project Development Agreement dated 23 May 2017 between QSPT and Itramas Technology Sdn. Bhd.; 17. Project Management Agreement dated 23 May 2017 between QSPS and Itramas Technology Sdn. Bhd.; 18. Project Management Agreement dated 23 May 2017 between QSPK and Itramas Technology Sdn. Bhd.; 19. Project Management Agreement dated 23 May 2017 between QSPMe and Itramas Technology Sdn. Bhd.; 20. Project Management Agreement dated 23 May 2017 between QSPT and Itramas Technology Sdn. Bhd.; 21. Asset Management Agreement dated 26 October 2016 between QSPS and Scatec Solar ASA.; 22. Asset Management Agreement dated 26 October 2016 between QSPK and Scatec Solar ASA.; 23. Asset Management Agreement dated 26 October 2016 between QSPMe and Scatec Solar ASA.; 24. Asset Management Agreement dated 26 October 2016 between QSPT and Scatec Solar ASA.; 25. Novation Agreement dated 29 May 2017 between QSPK, Scatec Solar ASA.and Scatec Solutions Malaysia Sdn. Bhd. in relation to the Asset Management Agreement entered into between QSPK and Scatec Solar ASA on 26 October 2016; 26. Novation Agreement dated 29 May 2017 between QSPMe, Scatec Solar ASA.and Scatec Solutions Malaysia Sdn. Bhd. in relation to the Asset Management Agreement entered into between QSPMe and Scatec Solar ASA on 26 October 2016; 27. Novation Agreement dated 29 May 2017 between QSPT, Scatec Solar ASA.and Scatec Solutions Malaysia Sdn. Bhd. in relation to the Asset Management Agreement entered into between QSPT and Scatec Solar ASA on 26 October 2016;
  236. Appendix 2-iii The cash flow projections of the Group for the financial years ending 31 December 2017 to 31 December 2038 were prepared by the management of the Issuer based on (continued): 28. Asset Management Agreement dated 29 May 2017 between QSPK and QSPS; 29. Asset Management Agreement dated 29 May 2017 between QSPMe and QSPS; 30. Asset Management Agreement dated 29 May 2017 between QSPT and QSPS; 31. Operation and Maintenance Agreement dated 29 May 2017 between QSPK and Scatec Solutions Malaysia Sdn. Bhd.; 32. Operation and Maintenance Agreement dated 29 May 2017 between QSPMe and Scatec Solutions Malaysia Sdn. Bhd.; 33. Operation and Maintenance Agreement dated 29 May 2017 between QSPT and Scatec Solutions Malaysia Sdn. Bhd.; 34. Lease Agreement dated 7 November 2016 between QSPK and TH Mestika Sdn. Bhd.; 35. Lease Agreement dated 10 January 2017 between QSPMe and Yeng Chong Realty Berhad; and 36. Lease Agreement dated 7 November 2016 between QSPT, Egn Networks Sdn Bhd and Solartif Sdn. Bhd. (The rest of this page has been intentionally left blank)
  237. Appendix 2-iv Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) and its subsidiaries (the “Group”) The cash flow projections of the Group for the financial years ending 31 December 2017 to 31 December 2038 QSPS is the holding company and its subsidiaries are: (i) (ii) (iii) Quantum Solar Park (Kedah) Sdn Bhd (“QSPK”); Quantum Solar Park (Melaka) Sdn Bhd (“QSPMe”); and Quantum Solar Park (Terengganu) Sdn Bhd (“QSPT”). (QSPK, QSPMe and QSPT are collectively referred to as the “Project Companies” and each a “Project Company”) The 3 x 50 megawatts (MW) solar photovoltaic plant projects of QSPK, QSPMe and QSPT are referred to as the “Project”. The principal bases and assumptions upon which the cash flow projections of the Group for the financial years ending 31 December 2017 to 31 December 2038 have been prepared are as follows: General assumptions 1. There will be no significant changes in the principal activities, composition and structure of the existing Group. 2. There will be no significant changes to the prevailing economic and political conditions that will adversely affect the activities and performance of the Group. 3. There will be no significant changes in the present legislation and government regulations, rates and duties, levies and taxes, which will adversely affect the operations of the Group or the market in which it operates. 4. There will be no significant changes in the prevailing inflation rates. 5. There will be no major breakdown or disruptions to the Group’s operating activities, industrial disputes or any other abnormal factors that will significantly affect the Group’s operations at their projected levels or disrupt their planned operations. 6. There will be no significant changes to the Group’s existing senior management, accounting, management and operational policies that will adversely affect the activities and performance of the Group. 7. The planned capital expenditure will be incurred in accordance to planned activities and there will be no material acquisitions or disposals of property, plant and equipment other than those planned. 8. There will be no material contingent liabilities and litigations which are likely to give rise to any proceedings which may materially affect the Group’s assets, financial position, operations and the profit projections.
  238. Appendix 2-v General assumptions (continued) 9. There will be no adverse variations to the following Power Purchase Agreements (“PPAs”): (i) (ii) (iii) Power Purchase Agreement dated 3 November 2016 between Tenaga Nasional Berhad and QSPK; Power Purchase Agreement dated 3 November 2016 between Tenaga Nasional Berhad and QSPMe; and Power Purchase Agreement dated 3 November 2016 between Tenaga Nasional Berhad and QSPT which would have a material adverse effect on the cash flow projections. 10. There will be no expropriation or termination events leading to termination of the PPAs prior to the end of the term of the PPAs. 11. The financial model has been prepared based on the assumption that IC Interpretation 12, Service Concession Arrangements is applicable for this Project. 12. The profit projections of the Group will be achieved. 13. The cash flow projections are prepared for the purpose of the proposed issuance of Green Sustainable and Responsible Investment Sukuk of RM990.0 million in nominal value by the Issuer to pay/advance to each Project Company as intercompany advances under the Intercompany Financing Documents to partially fund the respective Project Company’s project development cost of 3 x 50 megawatts (MW) solar photovoltaic plants (“Proposed Green SRI Sukuk”). 14. There will be no changes to the credit rating of the Proposed Green SRI Sukuk throughout the projected period. 15. The construction work of the Project commenced on 28 February 2017 pursuant to the issuance of a notice to proceed under the respective Engineering, Procurement and Construction Contract dated 28 February 2017 and it is assumed to be completed on 31 December 2017. (The rest of this page has been intentionally left blank)
  239. Appendix 2-vi Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) A) Construction period project cash flows (QSPS company level) (i) Investment assumptions 1. The investment at QSPS company level is assumed to be as follows: Ordinary shares of Project Companies RPS of Project Companies Intercompany financing to the Project Companies Total RM’000 12,516 237,811 990,000 1,240,327 2. RPS will be issued by the Project Companies to QSPS at RM1.00/RPS. Investment of RPS in the respective Project Companies are assumed to be as follows: Up to May 2017 June 2017 October 2017 November 2017 December 2017 Total QSPK No. of RPS (’000) (RM’000) 7,393 7,393 2,692 2,692 16,109 16,109 227 227 51,597 51,597 78,018 78,018 QSPMe No. of RPS (’000) (RM’000) 9,506 9,506 2,224 2,224 15,495 15,495 226 226 51,341 51,341 78,792 78,792 QSPT No. of RPS (’000) (RM’000) 6,222 6,222 3,147 3,147 17,874 17,874 235 235 53,523 53,523 81,001 81,001 3. Intercompany financing to be provided to the respective Project Companies are assumed to be as follows: QSPK QSPMe QSPT Total RM’000 325,215 328,185 336,600 990,000
  240. Appendix 2-vii Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) B) Construction period project cash flows (QSPS company level) (ii) Financing assumptions 1. The investment cost at QSPS company level is assumed to be funded based on the following: Ordinary shares by equity holders Proceeds from issuance of RCPS Proceeds from the Proposed Green SRI Sukuk Total RM’000 71,969 178,358 990,000 1,240,327 2. Drawdown of full equity/cash from equity holders is assumed to take place by December 2017, which is no later than the Equity Trigger Date as defined in the lodgement form to be filled with the Securities Commission Malaysia. 3. 125,163,462 RCPS will be issued by the Issuer to Scatec Solar Malaysia B.V. at RM1.425/RCPS for the total consideration of RM178,358,933. Proceeds from the issuance of RCPS is assumed to be received by the Issuer as follows: Up to May 2017 June 2017 October 2017 November 2017 December 2017 Total No. of RCPS (’000) 16,224 5,658 34,721 484 68,076 125,163 RM’000 23,120 8,063 49,478 689 97,008 178,358 4. Subject to the requirements under Clause 4.2.1(b) of the Novation Agreement dated 17 May 2017 between Scatec Solar ASA, QSPS and Scatec Solar Malaysia B.V. (“RCPS Novation Agreement”), the Issuer will redeem 53,194,471 RCPS at a redemption value of RM1/RCPS as follows: Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 Total No. of RCPS (’000) 3,500 6,000 5,000 5,000 5,000 5,000 5,000 5,000 13,694 53,194 RM’000 3,500 6,000 5,000 5,000 5,000 5,000 5,000 5,000 13,694 53,194
  241. Appendix 2-viii Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) A) Construction period project cash flows (QSPS company level) (continued) (ii) Financing assumptions (continued) 5. Subject to the requirements under Clause 4.2.1(b) of the RCPS Novation Agreement, the Issuer’s RCPS are assumed to be redeemed via capital reduction every six (6) monthly in accordance with Section 117 of the Companies Act 2016. 6. As required by Clause 4.3.1 of the RCPS Novation Agreement and subject to Clause 4.3.2 of the RCPS Novation Agreement, it is assumed that written approval will be obtained from Tenaga Nasional Berhad and the Malaysian Energy Commission in accordance with requirements under the PPA for Scatec Solar Malaysia B.V. to hold 49% of the ordinary shares of the Issuer. The remaining 71,968,991 RCPS will be converted to ordinary shares of the Issuer at the expected conversion price of RM0.96/RCPS on the 5th anniversary of the COD, i.e. 31 December 2022 (“Convertible RCPS”). 7. The Proposed Green SRI Sukuk of RM990.0 million in nominal value has been lodged with the Securities Commission Malaysia and drawdown of RM990.0 million will be received by end of June 2017. 8. The repayment of the Proposed Green SRI Sukuk of RM990.0 million is assumed to be as follows: Repayment of intercompany financing by Project Companies Tranche 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 QSPK RM’000 6,570 8,213 8,213 8,213 8,213 8,213 8,213 8,213 8,213 8,213 8,213 8,213 9,855 8,213 9,855 9,855 9,855 9,855 9,855 9,855 11,498 11,498 QSPMe RM’000 6,630 8,288 8,288 8,288 8,288 8,288 8,288 8,288 8,288 8,288 8,288 8,288 9,945 8,288 9,945 9,945 9,945 9,945 9,945 9,945 11,602 11,602 QSPT RM’000 6,800 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 10,200 8,500 10,200 10,200 10,200 10,200 10,200 10,200 11,900 11,900 Principal repayment by Issuer RM’000 20,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 25,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 30,000 35,000 35,000 Maturity Date 31/Dec/18 30/Jun/19 31/Dec/19 30/Jun/20 31/Dec/20 30/Jun/21 31/Dec/21 30/Jun/22 31/Dec/22 30/Jun/23 31/Dec/23 30/Jun/24 31/Dec/24 30/Jun/25 31/Dec/25 30/Jun/26 31/Dec/26 30/Jun/27 31/Dec/27 30/Jun/28 31/Dec/28 30/Jun/29
  242. Appendix 2-ix Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) A) Construction period project cash flows (QSPS company level) (continued) (ii) Financing assumptions (continued) Repayment of intercompany financing by Project Companies Tranche 23 24 25 26 27 28 29 30 31 32 33 Total QSPK RM’000 11,498 11,498 11,498 11,498 11,498 11,498 11,498 11,498 11,498 11,498 13,140 325,215 QSPMe RM’000 11,602 11,602 11,602 11,602 11,602 11,602 11,602 11,602 11,602 11,602 13,260 328,185 QSPT RM’000 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 11,900 13,600 336,600 Principal repayment by Issuer RM’000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 35,000 40,000 990,000 Maturity Date 31/Dec/29 30/Jun/30 31/Dec/30 30/Jun/31 31/Dec/31 30/Jun/32 31/Dec/32 30/Jun/33 31/Dec/33 30/Jun/34 31/Dec/34 9. The weighted average profit rate for the Proposed Green SRI Sukuk is 6.07%. 10. Profit payments on the Proposed Green SRI Sukuk are payable semi-annually in June and December each year. B) Operation period project cash flows (QSPS company level) (i) Revenue assumptions 1. QSPS will receive operating term fees totalling RM13.628 million each from Project Companies during commercial operation. (ii) Management service fees assumptions 1. Management service fees include the following expenses: Operating term fee paid to Scatec Solar ASA Project operations fee paid to Itramas Technology Sdn Bhd Other management expenses Total RM’000 / annum 1,360 125 147 1,632 (i) (ii) (i) Based on the Asset Management Agreement dated 26 October 2016 between QSPS and Scatec Solar ASA (ii) Based on the Project Management Agreement dated 23 May 2017 between QSPS and Itramas Technology Sdn Bhd The above costs are assumed to increase by 3.0% per annum throughout the projected period.
  243. Appendix 2-x Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) B) Operation period project cash flows (QSPS company level) (continued) (iii) RPS assumptions 1. QSPS will receive the RPS principal repayment from its Project Companies as follows: Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total QSPK RM’000 1,067 263 458 484 9,139 20,870 20,768 22,674 75,721 QSPMe RM’000 981 2,435 1,245 955 7,479 20,639 20,545 21,475 75,753 QSPT RM’000 878 2,594 1,326 1,078 7,890 21,149 21,040 21,855 77,812
  244. Appendix 2-xi Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) B) Operation period project cash flows (QSPS company level) (iv) Dividend assumptions 1. QSPS will receive dividends from its Project Companies as follows: Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total QSPK 32,964 4,910 5,328 5,840 6,407 6,622 5,507 5,082 5,002 5,625 5,070 4,825 4,689 5,266 4,828 5,550 14,803 22,212 10,040 9,619 4,521 174,710 Dividend received (RM’000) QSPMe 30,321 1,848 2,282 2,878 2,484 1,262 1,337 2,362 2,441 3,277 2,750 2,110 2,060 3,073 4,186 3,930 12,452 21,817 8,222 7,895 3,668 122,654 QSPT 31,533 2,379 2,830 3,446 3,030 1,553 1,683 2,689 2,874 3,562 3,006 2,354 2,309 3,354 4,293 3,707 12,885 22,139 8,440 7,884 3,662 129,613 (v) Investing assumptions 1. Cash in the Finance Service Reserve Account (“FSRA”) and the Maintenance Reserve Account (“MRA”) is assumed to earn interest at a rate of 2.5% per annum. Interest is assumed to be received in the same year. 2. Excess cash (after taking into account working capital, capital expenditure, financing requirements and dividend payment obligations) is assumed to be placed in bank deposits to earn interest at a rate of 2.5% per annum. Interest is assumed to be received in the same year. Interest is assumed to be received in the same month during construction period and twice a year during operation.
  245. Appendix 2-xii Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) B) Operation period project cash flows (QSPS company level) (vi) Financing assumptions 1. The RCPS will yield a fixed cumulative dividend of 10.5% per annum from the date on which the RCPS has been subscribed (“Fixed RCPS Dividend”). 2. All profits in the form of cash which are available each year for distribution from the Issuer in accordance with the stipulations of the Companies Act 2016 and subject to the distribution covenants under the Proposed Green SRI Sukuk for the Project having been fulfilled, will be used to pay the Fixed RCPS Dividend for each relevant year, before paying dividends to Quantum Solar Park Malaysia Sdn Bhd (“ProjectCo”) and dividends to Scatec Solar Malaysia B.V. five (5) years after COD onwards, for each of such relevant year. Subject to availability of distributable profits and distribution covenants, for the duration of the first 5 years of operations of the Project, the Issuer will pay out a maximum annual dividend of RM13.0 million to ProjectCo. 3. Taking into consideration items (iv)(1) and (iv)(2) above, the dividend payments to the RCPS holder and ordinary shareholders throughout the projected period will be as follows: Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total Dividend payments to RCPS holder (RM’000) 4,327 15,874 15,885 14,583 10,354 6,386 12,423 3,735 55 11,130 6,305 101,055 Dividend payments to ordinary shareholders (RM’000) 6,500 13,000 13,000 6,500 5,458 11,726 11,180 13,739 15,396 12,974 49,534 90,201 88,935 30,933 12,509 381,585 4. It is assumed that the Issuer will meet the requirements of the Companies Act 2016 (Subdivision 6 of Division 1 of Part III) in order to pay dividends as projected. 5. All the financial and distribution covenants of the Issuer will be met.
  246. Appendix 2-xiii Quantum Solar Park (Semenanjung) Sdn Bhd (“QSPS” or the “Issuer”) C) Tax assumptions (QSPS company level) 1. The provisional tax computations for YA 2016 to YA 2038 have been prepared on the basis that QSPS is an Investment Holding Company (“IHC”) under Section 60F of the Malaysian Income Tax Act, 1967 (“MITA”) whereby its investment income is more than 80% of the gross income. 2. QSPS is a GST registered person (the effective date of registration is to be ascertained) which has GST taxable periods in accordance to the Goods and Services Tax Act 2014 (“GST Act 2014”). As IHC, QSPS will be regarded as a mixed supplier for GST purposes (undertaking both taxable supplies - recovery of AMA management fees and exempt supply - interest income). GST input tax in regards to the exempt supply is captured as part of the expenses (i.e. other management expenses) in the statement of profit or loss. Furthermore, such GST input tax does not form part of the GST input tax reclaims in the cash flow projections. 3. It is assumed that all the profit payment are due to be paid or payable in the basis period in which the profit payment are accrued. Interest restriction is not applicable on the basis that the Proposed Green SRI Sukuk proceeds raised by QSPS will be fully on-lent to its subsidiaries and the profit payment have been fully set off by interest income from the said subsidiaries. 4. It is assumed that, throughout the projection period, the corporate income tax rate and GST rate will remain at 24% and 6% respectively. 5. It is assumed that all tax returns filed with the Malaysian Inland Revenue Board (“MIRB”) prior to YA 2016 are not disputed by the MIRB. 6. It is assumed that QSPS does not receive deposits or advance payments which have not been taken into account in the Profit Before Tax (“PBT”) for the financial periods from 1 January 2016 to 31 December 2038. 7. It is assumed that all related party transactions (if any) can be substantiated by reference to contemporaneous transfer pricing documentation and that the payments are at arm’s length. 8. Thin Capitalisation provisions under the Section 140A(4) of the MITA have not been accounted for in the provisional tax computations for QSPS. Although Section 140A(4) of the MITA is technically effective from 1 January 2009, the Ministry of Finance has notified that the implementation of the Income Tax (Thin Capitalisation) Rules is deferred to 31 December 2017 and will be effective on 1 January 2018. In the absence of guideline issued by MIRB, it is assumed that the Thin Capitalisation rules will not have impact to the cash flow projections.
  247. Appendix 2-xiv QSPK , QSPMe, QSPT – The Project Companies A) Construction period project cash flows (i) Project cost assumptions 1. The construction work of the 3 x 50 megawatts (MW) solar photovoltaic plant projects of QSPK, QSPMe and QSPT (the “Project”) commenced on 28 February 2017 and it is assumed to be completed on 31 December 2017. 2. The Project costs are assumed to be as follows: Engineering, Procurement Construction and Commissioning (EPCC) contract value Development and financing expenses Project operations fee Construction term management fee Stamp duty on intercompany financing document Cost of performance bonds Profit during construction Initial deposit into Finance Services Reserve Account (FSRA) Banker’s Guarantee (BG) during construction Goods and Services Tax (GST) Total QSPK RM’000 344,220 QSPMe RM’000 342,316 QSPT Total RM’000 RM’000 354,973 1,041,509 18,937 24,453 21,328 64,717 139 431 139 431 139 431 417 1,294 1,650 1,650 1,650 4,950 182 8,854 9,855 182 8,943 9,800 182 9,179 10,162 546 (ii) 26,796 (iii) 29,817 1,346 1,335 1,406 4,087 (iv) 21,725 407,339 21,875 411,124 (i) 22,414 66,014 (v) 421,864 1,240,327 Notes: (i) Computed based on 0.5% of the intercompany financing amount of RM990.0 million. (ii) Calculated based on performance bond / bank guarantee of RM9.0 million per project (as required by the respective PPAs), at an assumed rate of 2.0% for a duration of 369 days. (iii) Computed based on the weighted average profit rate of 6.07% on the intercompany financing amount of RM990.0 million less interest received (from cash balance in bank) at an assumed rate of 2.5% throughout the construction period. (iv) BG costs consist of two (2) BGs, i.e. back-ended equity and contingency. (v) Computed based on GST rate of 6% on the sum of the EPCC contract value and certain development and financing expenses as well as the project operations fee and construction term management fees.
  248. Appendix 2-xv QSPK , QSPMe, QSPT – The Project Companies A) Construction period project cash flows (continued) (ii) RPS assumptions 1. RPS will be issued by the respective Project Companies to QSPS. Proceeds from the issuance of RPS is assumed to be received by the Project Companies as follows: Up to May 2017 June 2017 October 2017 November 2017 December 2017 Total QSPK No. of RPS RM’000 (’000) 7,393 7,393 2,692 2,692 16,109 16,109 227 227 51,597 51,597 78,018 78,018 QSPMe No. of RPS RM’000 (’000) 9,506 9,506 2,224 2,224 15,495 15,495 226 226 51,341 51,341 78,792 78,792 QSPT No. of RPS RM’000 (’000) 6,222 6,222 3,147 3,147 17,874 17,874 235 235 53,523 53,523 81,001 81,001 B) Operations period project cash flows (i) Revenue assumptions 1. It is assumed that the COD of the PPAs will be on 31 December 2017. 2. Commercial operation will be for a period of 21 years from the COD. 3. Energy rate used in the computation of revenue is as follows: First 12 years from COD Subsequent years RM / kWh 0.520 0.505
  249. Appendix 2-xvi QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (i) Revenue assumptions (continued) 4. The annual energy output/yield of the Project Companies used in the computation of revenue is assumed to be based on P90 probability as per the Energy Yield Assessment provided by the Issuer as follows: Year Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17 Year 18 Year 19 Year 20 Year 21 QSPK (MWh) 90,475 90,112 89,749 89,387 89,024 88,661 88,299 87,936 87,573 87,211 86,848 86,485 86,123 85,760 85,397 85,035 84,672 84,309 83,947 83,584 83,221 QSPMe (MWh) 85,936 85,592 85,248 84,903 84,559 84,214 83,870 83,525 83,181 82,836 82,492 82,147 81,803 81,458 81,114 80,769 80,425 80,080 79,736 79,391 79,047 QSPT (MWh) 88,056 87,704 87,351 86,998 86,645 86,292 85,939 85,586 85,233 84,880 84,527 84,174 83,821 83,468 83,115 82,762 82,409 82,056 81,703 81,350 80,997 Total (MWh) 264,467 263,408 262,348 261,288 260,228 259,167 258,108 257,047 255,987 254,927 253,867 252,806 251,747 250,686 249,626 248,566 247,506 246,445 245,386 244,325 243,265 5. Availability factor of the Grid is assumed to be 99.9% throughout the projected period. 6. Receivables turnover days is assumed to be 30 days throughout the projected period.
  250. Appendix 2-xvii QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (ii) Operating costs assumptions 1. Operating costs include, amongst others, the following key expenses: Operation and maintenance fees Mobilisation cost Insurance Site communication and utilities Cost of spare parts (from Year 3 onwards) Operating term fee – Scatec Solar ASA Operating term fee – QSPS Project operations fee - Itramas Other management expenses Night time auxiliary power Land lease rental Inverter service fee (from Year 6 onwards) (i) QSPK QSPMe QSPT RM’000/ RM’000/ RM’000/ annum annum annum 3,075 3,122 3,122 384 390 390 540 540 540 40 40 40 83 83 83 50 50 50 467 467 467 125 125 125 147 147 147 200 200 200 Refer Item 2 below Refer Item 3 below (i) (ii) (iii) (iv) (v) (vi) Based on the respective Operation and Maintenance Agreements dated 29 May 2017 between QSPK, QSPMe, QPT and Scatec Solutions Malaysia Sdn Bhd. (ii) The mobilisation cost is not recurring and will be paid one-off upon COD. (iii) RM83 thousand is the starting cost at Year 1. Cost of spare parts will be paid from Year 3 onwards at RM88 thousand. (iv) Based on the respective Asset Management Agreements dated 26 October 2017 between QSPK, QSPMe, QPT and Scatec Solar ASA. (v) Based on the respective Asset Management Agreement dated 29 May 2017 between QSPK, QSPMe, QPT and QSPS. (vi) Based on the respective Project Management Agreement dated 23 May 2017 between QSPK, QSPMe, QPT and Itramas Technology Sdn Bhd. The above costs (save for night time auxiliary power, land lease rental and inverter service fees) are assumed to increase by 3.0% per annum throughout the projected period. 2. Land lease rental payments will be made based on the respective lease/ sub-lease agreements as follows: RM’000 Year 1 to 3 Year 4 to 7 Year 8 to 11 Year 12 to 15 Year 16 to 19 Year 20 onwards QSPK 728 801 881 969 1,066 1,172 QSPMe 1,136 1,136 1,136 1,136 1,136 1,136 Year 1 to 4 Year 5 to 9 Year 10 to 14 Year 15 to 19 Year 20 onwards QSPT 780 936 1,123 1,348 1,617
  251. Appendix 2-xviii QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (ii) Operating costs assumptions (continued) 3. Inverter service fees will be incurred as follows: Year 6 to 10 Year 11 to 15 Year 16 to 20 Year 21 onwards QSPK RM’000 388 489 748 588 QSPMe RM’000 388 489 748 588 QSPT RM’000 388 489 748 588 4. Contingency cost of 7.3% of the sum of operation and maintenance fees, insurance, operating term fee, project operations fee and other management expenses is assumed throughout the projected period. 5. Payables turnover days is assumed to be 30 days throughout the projected period. 6. The Project Companies will pay operating term fees to the Issuer as follows: Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total QSPK RM’000 475 489 504 519 535 551 567 584 602 620 639 658 678 698 719 740 763 785 809 833 858 13,628 QSPMe RM’000 475 489 504 519 535 551 567 584 602 620 639 658 678 698 719 740 763 785 809 833 858 13,628 QSPT RM’000 475 489 504 519 535 551 567 584 602 620 639 658 678 698 719 740 763 785 809 833 858 13,628
  252. Appendix 2-xix QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (iii) RPS assumptions 1. The Project Companies will redeem the RPS from QSPS at a redemption value of RM1/RPS as follows: Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total QSPK RM’000 1,067 263 458 484 9,139 20,870 20,768 22,674 75,721 QSPMe RM’000 981 2,435 1,245 955 7,479 20,639 20,545 21,475 75,753 QSPT RM’000 878 2,594 1,326 1,078 7,890 21,149 21,040 21,855 77,812 2. The Project Companies’ RPS are to be redeemed via capital reduction in accordance with Section 117 of the Companies Act 2016.
  253. Appendix 2-xx QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (iv) Dividend assumptions 1. The Project Companies will pay dividends to the Issuer as follows: Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 Total QSPK RM’000 32,964 4,910 5,328 5,840 6,407 6,622 5,507 5.082 5,002 5,625 5,070 4,825 4,689 5,266 4,828 5,550 14,803 22,212 10,040 9,619 4,521 174,710 QSPMe RM’000 30,321 1,848 2,282 2,878 2,484 1,262 1,337 2,362 2,441 3,277 2,750 2,110 2,060 3,073 4,186 3,930 12,452 21,817 8,222 7,895 3,668 122,654 QSPT RM’000 31,533 2,379 2,830 3,446 3,030 1,553 1,683 2,689 2,874 3,562 3,006 2,354 2,309 3,354 4,293 3,707 12,885 22,139 8,440 7,884 3,662 129,613 2. It is assumed that the Project Companies will meet the requirements of the Companies Act 2016 (Subdivision 6 of Division 1 of Part III) in order to pay dividends as projected.
  254. Appendix 2-xxi QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (v) Financing assumptions 1. The Project Companies will repay the intercompany financing (principal and interest) to the Issuer as follows: Year 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Total QSPK RM’000 Principal 6,570 16,425 16,425 16,425 16,425 16,425 18,068 18,068 19,710 19,710 21,353 22,995 22,995 22,995 22,995 22,995 24,638 325,215 QSPMe RM’000 Principal 6,630 16,575 16,575 16,575 16,575 16,575 18,233 18,233 19,890 19,890 21,548 23,205 23,205 23,205 23,205 23,205 24,863 328,185 QSPT RM’000 Principal 6,800 17,000 17,000 17,000 17,000 17,000 18,700 18,700 20,400 20,400 22,100 23,800 23,800 23,800 23,800 23,800 25,500 336,600 2. The weighted average interest rate for the intercompany financing is 6.07%. 3. All the financial and distribution covenants of the Project Companies will be met.
  255. Appendix 2-xxii QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (vi) Tax assumptions 1. It is assumed that the Project Companies will be granted the Investment Tax Allowance (“ITA”) tax incentive in respect of Green Technology Project whereby they are entitled for ITA claim of 100% of qualifying capital expenditure incurred on a green technology project (from the date in which the first qualifying capital expenditure is incurred until YA 2020). ITA can be offset against 70% of the statutory income from YA 2018 onwards until it is fully absorbed. 2. The solar projects by the Project Companies are eligible for the ITA tax incentive as they are not approved under Feed-in-Tariff (“FiT”) for solar by Sustainable Energy Development Authority (“SEDA”). 3. The ITA application has been submitted to Malaysian Investment Development Authority (“MIDA”) on 17 February 2017 and pending approval by the authority. It is assumed that the Project Companies will meet all of the stipulated conditions under the ITA tax incentive. The management of the Issuer is confident that the ITA application will be approved by the relevant authority. 4. QSPK and QSPMe are GST registered persons effective 1 April 2017. It is assumed that QSPT will be a GST registered person (application to the Royal Malaysian Customs Department (“Customs”) submitted on 13 April 2017, effective date of registration is to be ascertained) and have GST taxable periods in accordance to the GST Act 2014. The Project Companies are assumed to undertake wholly standard rated taxable supplies from the beginning of YA 2018. The Project Companies will not produce any taxable supplies prior to YA 2018. 5. The Project Companies have adopted the Malaysian Financial Reporting Standard (“MFRS”) - IC Interpretation 12 (“IC 12”) in preparing their financial statements for the financial periods from 1 January 2016 to 31 December 2038. Accordingly, the construction revenue and cost relevant to the construction services under a service concession arrangement are recognised based on stage of completion of the work performed and are merely accounting book entries. Hence, for income tax purposes, the construction revenue would not be subject to tax whilst the construction costs would not qualify for tax deduction. Apart from this, it is assumed that there is no other MFRS accounting adjustment included in the statement of profit or loss for the financial years from 1 January 2016 to 31 December 2038.
  256. Appendix 2-xxiii QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (vi) Tax assumptions (continued) 6. The construction of solar plants are expected to be completed by 31 December 2017. The GST input tax incurred during the construction period amounted to RM66,014,220. The management of the Issuer is confident that the GST input tax will be refunded by Customs in full to the Project Companies in two (2) instalments in the first year of business operation (i.e. 50% in June 2018 and the remaining 50% in December 2018) on the following assumptions: (i) Special approval is granted by the Director General of the Customs (“DG”) for GST input tax incurred prior to the GST registration of the Project Companies (either on goods or services related to capital goods (which has been capitalised according to the standard accounting principal in Malaysia) which fulfils the conditions in Regulation 46 of the GST Regulations 2014); and (ii) Approval is granted by the DG under Section 38(7) of the GST Act 2014 for the refund of GST input tax incurred when the Project Companies has made no taxable supply during a taxable period or any previous taxable period. 7. It is assumed that, from YA 2018 onwards, all the interest income received/receivable by the Project Companies is taxable interest income derived from the placement with local banks. 8. With the exception of amortisation, it is assumed that all outgoings and expenses incurred by the Project Companies in the projection period will be tax deductible pursuant to Section 33(1) of the MITA (i.e. wholly and exclusively incurred in the production of Project Companies’ gross income). Also, it is assumed that there is no capital expenditure nor general provisional amounts included in the following: (a) O&M fee (b) O&M mobilisation cost (c) Contingency 9. It is assumed that withholding tax provisions (where applicable) on payments made to non-resident(s) have been complied with and the Project Companies do not bear any withholding tax on behalf of the non-resident(s).
  257. Appendix 2-xxiv QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (vi) Tax assumptions (continued) 10. It is assumed that the Proposed Green SRI Sukuk proceeds are wholly used for the Project Companies’ business purposes and the interest expenses are due to be paid or payable in the basis period in which the interest expenses are accrued. Further, the following dividends will be paid by the Project Companies to QSPS in year 2018: The Project Companies QSPK QSPMe QSPT Dividend Payout (RM’000) 1-Jan-18 to 1-Jul-18 to 30-Jun-18 31-Dec-18 18,113 14,851 16,931 13,390 17,565 13,968 Total : Total 32,964 30,321 31,533 94,818 The above dividend payouts will be financed solely by internally generated funds of the respective Project Companies (i.e. not financed (in whole or in part) by the Proposed Green SRI Sukuk proceeds). Based on the above, there should not be any restriction in the deduction of interest expenses. 11. For the purposes of the cash flow projections, it is assumed that the date of commencement of business for the Project Companies is the date the solar plants are capable of commencing the generation of power and producing income. 12. Capital allowance (“CA”) and industrial building allowance (“IBA”) have been claimed on qualifying assets based on the following assumptions: (a) (b) (c) the Project Companies incur qualifying expenditure (i.e. EPCC contract value and Project Development Agreement (“PDA”) expenses for project manager to monitor the progress for the construction of solar plants); the Project Companies own the relevant assets at the relevant period; and the relevant assets are used in Project Companies’ power generating business from YA 2018 onwards and the assets will be continuing to be owned and are used in their power generating business at the end of each basis period until YA 2038. The day-to-day management service fee which will be incurred during construction will not qualify for CA/IBA and ITA claims. For IBA, it is also assumed that the Project Companies incur qualifying expenditure on the construction of industrial building or structure for use in the power generating business (i.e. no expenditure are incurred for non-qualifying buildings such as administrative building, staff accommodation, surau, third party assets, etc).
  258. Appendix 2-xxv QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (vi) Tax assumptions (continued) The cost of preparing, cutting, tunnelling or levelling land in order to prepare the site for the installation of plant and machinery (where applicable) is assumed to be less than 10% of the aggregate cost of the plant and its installation and hence, CA has been claimed on such costs. The rates of CA and IBA on the qualifying plant and machinery, buildings and associated civil works throughout the projection period are: Initial allowance Annual allowance CA 20% 14% IBA 10% 3% Apart from the above, ITA has been claimed on 100% of qualifying expenditure incurred on a green technology project by the Project Companies. Solar plants are assumed to be qualifying plant expenditure for CA claims purposes. 13. It is assumed that there are no disposals nor write-offs of fixed assets by the Project Companies throughout the projection period. It is also assumed that the qualifying assets and buildings will continue to be in use in the power generating business at the end of the projection period and therefore, no balancing charges (“BC”) and balancing allowances (“BA”) are computed at the end of the projection period. 14. It is assumed that none of the qualifying assets are acquired on hire purchase or lease. 15. The Project Companies were incorporated on 14 September 2016 and therefore there will not be any unutilised capital allowances, unutilised tax investment allowances and unabsorbed business losses carried forward to set off against the Project Companies’ adjusted business income and statutory business income for YA 2016 onwards. 16. It is assumed that, throughout the projection period, the corporate income tax rate and GST rate will remain at 24% and 6% respectively. 17. As the Project Companies were incorporated on 14 September 2016, there will not be any tax returns filed with the MIRB prior to YA 2017 that are disputed by the MIRB. 18. It is assumed that the Project Companies do not receive deposits or advance payments which have not been taken into account in the PBT for the period from 14 September 2016 to 31 December 2038. 19. It is assumed that all related party transactions (if any) can be substantiated by reference to contemporaneous transfer pricing documentation and that the payments are at arm’s length.
  259. Appendix 2-xxvi QSPK , QSPMe, QSPT – The Project Companies B) Operations period project cash flows (continued) (vi) Tax assumptions (continued) 20. Thin Capitalisation provisions under the Section 140A (4) of the MITA have not been accounted for in the provisional tax computations for the Project Companies. Although Section 140A(4) of the MITA is technically effective from 1 January 2009, the Ministry of Finance has notified that the implementation of the Income Tax (Thin Capitalisation) Rules is deferred to 31 December 2017 and will be effective on 1 January 2018. In the absence of guideline issued by MIRB, it is assumed that the Thin Capitalisation rules will not have impact to the cash flow projections. 21. It is assumed that none of the following in respect of GST is expensed off to the statement of profit or loss during the projection period:  GST input tax for which the Project Companies are entitled to claim for GST purposes but has failed to make such claims; and/or  GST output tax borne by the Project Companies.
  260. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 3 Overview of the Kedah Site
  261. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 4 Site Plan of the Kedah Site
  262. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 5 Overview of the Melaka Site
  263. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 6 Site Plan of the Melaka Site
  264. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 7 Overview of the Terengganu Site
  265. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 8 Site Plan of the Terengganu Site
  266. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum APPENDIX 9 CICERO’s Second Opinion on Quantum Solar Park Green Bonds Framework
  267. ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 02 June 2017
  268. CICERO Summary Quantum Solar Park (Semenanjung) Sdn Bhd (hereafter: Quantum Solar) has developed a Green Bonds Framework. The aim is to issue the Green Bond in Malaysia. Under the local Islamic banking rules, these instruments are called Sukuks. Overall, the Green Bonds Framework established by Quantum Solar provides a sound framework for investments in the already selected projects. The framework lists three utility scale solar power projects in Malaysia that are to be partially financed by issuing the Sukuk. The three solar photovoltaic plants of 50MW (AC - alternating current) each are located in Peninsular Malaysia, with one plant in the northern town of Gurun in Kedah, one in the eastern coast town of Merchang in Terengganu and another in the southern town of Jasin in Melaka. Solar power is key in supporting the transition to a low-carbon society. Quantum Solar is a Holding Company (HoldCo.), which has been established for the purpose of developing and owning the three PV solar power projects. According to the framework, one of the stakeholders in the company, Scatec Solar ASA (hereafter: Scatec Solar), will provide several services in this undertaking. Scatec Solar is a Norwegian independent solar power producer. The company develops, builds, owns, operates and maintains solar power plants worldwide. In this project, Scatec Solar’s responsibilities encompass engineering, procurement, construction, asset management and reporting. In all of these responsibilities, Scatec Solar’s work will be guided by its own “Sustainability Framework”. This framework is based on the UN Sustainable Development Goals. Among other items, the framework states that social and environmental impacts of all projects are assessed and managed according to international best practice. CICERO is encouraged by Scatec Solar’s ambitions to keep the total carbon footprint of all projects low by applying lifecycle calculations to the process of choosing suppliers. Impact reporting is an important tool to enhance transparency in regard to the projects economic risk from climate change and the environmental effectiveness of the projects. According to the Green Bonds Framework, once the solar PV plants are operational, the HoldCo. will report on energy production and CO2 emission reduction on an annual basis (including the share of energy production and emission reduction which is equivalent to the Green Sukuk’s share of total project costs). These annual reports will be available to CIMB Bank, the Sukuk Trustee and the rating agency that issued a financial rating of the Sukuk in full length and in abstracts to bond holders. Transparency is key in order to build trust in the Green Bond/Sukuk market and CICERO therefore encourages the issuer to follow best practice which is to make these reports publicly available. Based on the overall assessment of project type, the policies guiding the implementation, and transparency considerations, Quantum Solar’s Green Bonds Framework receives a Dark Green shading. ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 2
  269. CICERO Contents Summary _____________________________________________________________________________________ 2 1 Introduction and background _______________________________________________________________ 4 2 Brief Description of Quantum Solar Park ’s Green Bond Framework and rules and procedures for climate-related activities ___________________________________________________________________ 6 Definition:............................................................................................................................................................ 6 Selection: ............................................................................................................................................................ 6 Management of proceeds: .................................................................................................................................. 7 Transparency and Accountability: ....................................................................................................................... 7 3 Assessment of Quantum Solar Park's Green Bond framework and environmental policies ___________ 9 Eligible projects under the Green Bond Framework ............................................................................................ 9 Strengths ............................................................................................................................................................ 9 Weaknesses ..................................................................................................................................................... 10 Pitfalls ............................................................................................................................................................... 10 Impacts beyond the project boundary ........................................................................................................ 10 References ___________________________________________________________________________________ 11 Appendix: About CICERO _______________________________________________________________________ 12 ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 3
  270. CICERO 1 Introduction and background As an independent , not-for-profit, research institute, CICERO (Center for International Climate and Environmental Research - Oslo) provides Second Opinions on institutions’ framework and guidance for assessing and selecting eligible projects for green bond investments, and assesses the framework’s robustness in meeting the institutions’ environmental objectives. The Second Opinion is based on documentation of rules and frameworks provided by the institutions themselves (the client) and information gathered during meetings, teleconferences and e-mail correspondence with the client. CICERO is independent of the entity issuing the bond, its directors, senior management and advisers, and is remunerated in a way that prevents any conflicts of interests arising as a result of the fee structure. CICERO has established the global Expert Network on Second Opinions (ENSO), a network of independent non-profit research institutions on climate change and other environmental issues, to broaden the technical expertise and regional experience for Second Opinions. CICERO works confidentially with other members in the network to enhance the links to climate and environmental science, building upon the CICERO model for Second Opinions. In addition to CICERO, ENSO members currently include Basque Center for Climate Change (BC3), International Institute for Sustainable Development (IISD), Stockholm Environment Institute (SEI), and Tsinghua University's Institute of Energy, Environment and Economy. A more detailed description of CICERO can be found at the end of this report. ENSO encourages the client to make this Second Opinion publically available. If any part of the Second Opinion is quoted, the full report must be made available. CICERO’s Second Opinions are normally restricted to an evaluation of the mechanisms or framework for selecting eligible projects at a general level. CICERO does not validate or certify the climate effects of single projects, and thus, has no conflict of interest in regard to single projects. CICERO is neither responsible for how the framework or mechanisms are implemented and followed up by the institutions, nor the outcome of investments in eligible projects. This note provides a Second Opinion of Quantum Solar Park’s (hereafter: Quantum Solar) Green Bonds Framework and policies for considering the environmental impacts of their projects. The aim is to assess the Quantum Solar Green Bonds Framework as to its ability to support Quantum Solar`s stated objective of promoting the transition to low-carbon and climate resilient growth. This Second Opinion is based on the green bond framework presented to CICERO by the issuer. This framework has been specifically designed for the three PV solar power projects. Any amendments or updates to the framework require that CICERO undertake a new assessment. CICERO takes a long-term view on activities that support a low-carbon climate resilient society. In some cases, activities or technologies that reduce near-term emissions result in net emissions or prolonged use of high-emitting infrastructure in the long-run. CICERO strives to avoid locking-in of emissions through careful infrastructure investments, and moving towards low- or zero-emitting infrastructure in the long run. Proceeds from green bonds may be used for financing, including refinancing, new or existing green projects as defined under the mechanisms or framework. CICERO assesses in this Second Opinion the likeliness that the issuer's categories of projects will meet expectations for a low carbon and climate resilient future. Expressing concerns with ‘shades of green’ CICERO Second Opinions are graded dark green, medium green or light green, reflecting the climate and environmental ambitions of the bonds and the robustness of the governance structure of the Green Bond ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 4
  271. CICERO Framework . The grading is based on a broad qualitative assessment of each project type, according to what extent it contributes to building a low-carbon and climate resilient society. This Second Opinion will allocate a ‘shade of green’ to the green bond framework of Quantum Solar: • Dark green for projects and solutions that are realizations today of the long-term vision of a low carbon and climate resilient future. Typically, this will entail zero emission solutions and governance structures that integrate environmental concerns into all activities. • Medium green for projects and solutions that represent steps towards the long-term vision, but are not quite there yet. • Light green for projects and solutions that are environmentally friendly but do not by themselves represent or is part of the long-term vision (e.g. energy efficiency in fossil-based processes). • Brown for projects that are irrelevant or in opposition to the long-term vision of a low carbon and climate resilient future. The project types that will be financed by the green bond primarily define the overall grading. However, governance and transparency considerations also factor in, as they can give an indication whether the institution that issues the green bond will be able to fulfil the climate and environmental ambitions of the investment framework. ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 5
  272. CICERO 2 Brief Description of Quantum Solar ’s Green Bond Framework and rules and procedures for climate-related activities Brief description of issuer Quantum Solar is the issuer of the Green Sukuk. The proceeds of the issue are intended to partly finance three utility scale solar PV power plants. Quantum Solar is a holding company (HoldCo.) that was established for this purpose. The Malayan owners of Quantum Solar are ItraMAS Technology Sdn Bhd, an engineering company in green technology and public works, Maltech Pro Bhd, a producer of mobile applications, devices and equipment, and Cam Lite Sdn Bhd, a provider of electronic and related products and services. Quantum Solar has awarded the Norwegian solar power company Scatec Solar several roles in this undertaking. Besides being an investor in the HoldCo., Scatec Solar will also be the engineering, procurement and construction (EPC) contractor. Scatec Solar will further provide asset management services to the HoldCo., among others in connection to the Green Sukuk issue and related reporting. Finally, Scatec Solar will be the contractor responsible for operation and maintenance (O&M) of the three power plants. According to Scatec Solar, its partner company ItraMAS has been appointed as a sub-contractor under the EPC and O&M responsibilities. Given that Quantum Solar is a newly established HoldCo. and in light of the extensive role Scatec Solar has been awarded , Quantum Solar’s framework for the issuance of Green Sukuks strongly reflects and refers to Scatec Solar’s sustainability framework, which therefor will be central to this second opinion. Scatec Solar was founded in Norway in 2007 and is organized as a Public Limited Stock Company listed on the Oslo stock exchange under the ticker SSO. Scatec Solar is an independent solar power producer. The company develops, builds, owns, operates and maintains photovoltaic solar power plants worldwide. Selection The selection of projects and the choice of project sites was done prior to Scatec Solar joining Quantum Solar. The three companies had formed Quantum Solar as a consortium and signed power purchase agreements (PPA) for three solar PV projects in 2016 with Tenaga Nasional Berhad. Scatec Solar has done an assessment of the three project partners with focus on governance related risks. This sort of assessment is part of Scatec Solar’s sustainability framework. Scatec Solar is currently finalizing the environmental and social impact assessments of the three projects, conducted by a third party using the IFC performance standards and the Equator Principles as a baseline. According to its sustainability framework, Scatec Solar develops all projects in accordance with these standards. Scatec Solar has informed CICERO that no findings have emerged during the due diligence process so far that would alter its intention to go ahead with the projects. According to the issuer there is no opposition to the projects on grounds of environmental concerns from NGO’s or other civil society actors. ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 6
  273. CICERO The choice of suppliers and sub-contractors has been guided by Scatec Solar ’s policy for “responsible procurement”. This policy aims to ensure that suppliers and sub-contractors commit to, and abide by, standards focusing on social, environmental, and labor-rights criteria as well as on transparency. Quantum Solar’s Green Bonds framework does not refer to any other project categories or projects than the three utility scale solar PV plants. Scatec Solar has informed CICERO that the Green Sukuk issue is directly connected to the financing of specifically these three projects and that it will cover a majority share of total costs. Management of proceeds Scatec Solar has informed CICERO that the HoldCo. has appointed CIMB Investment Bank as Principal advisor and both CIMB Investment Bank and Maybank Investment Bank as Joint Lead Arrangers and Joint Lead Managers for the issuance of the Green Sukuk. According to Scatec Solar, all Sukuk proceeds and main accounts of the HoldCo. will be jointly managed by Scatec Solar’s local subsidiary “Scatec Solar Solutions Malaysia Sdn Bhd” (hereafter: SSSM) and the Security Agent. This subsidiary company has an asset management agreement with the HoldCo. and the three project companies. Scatec Solar informed CICERO that proceeds from the Sukuk will be transferred to the account of the HoldCo. and flow to the accounts of the project companies. Scatec Solar has informed that payments from the account will be made in accordance with milestones defined under the engineering, procurement and construction contract upon certification by the Lenders’ Technical Advisor, and have to be in accordance with the Sukuk agreement between the bank and the HoldCo. Scatec Solar informed CICERO that SSSM has been granted authority by the board of the HoldCo. to activate payments from the HolcCo.’s project companies’ accounts once milestones are reached, based on an authorized budget. Deviations from this budget require the involvement of the board. Scatec Solar has confirmed that unallocated proceeds will remain in the Hold.Co’s project companies’ accounts and will not be temporarily invested in any financial products. Transparency and Accountability During construction SSSM will issue monthly reports and provide them to the arranging banks. These reports will include information on allocation of proceeds per project until completion, as well as information on potentially unallocated proceeds after completion. These reports will be accessible to CIMB Bank only. According to the Green Bonds Framework, once the solar PV plants are operational, the HoldCo. will report on energy production and CO2 emission reduction on an annual basis. Scatec Solar informed CICERO further that these indicators will be reported both per project and as a total for all three projects combined. Since the Green Sukuk will not cover the total project costs, Scatec Solar informs that reporting will also show the share of energy production and emission reduction which is equivalent to the Green Sukuk’s share of total project costs. These annual reports will be available to CIMB Bank, the Sukuk Trustee and the rating agency that issued a financial rating of the Sukuk in full length and in abstracts to bond holders. tec Solar’s local asset management subsidiary SSSM will be responsible for reporting on behalf of the HoldCo. as part of SSSM’s asset management services. SSSM will apply Scatec Solar’s methodology for such reporting. The emission abatement will be calculated using the baseline emission factor according to the Sustainable Energy Development Authority Malaysia. ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 7
  274. CICERO The table below lists the documents that formed the basis for this Second Opinion : Document Document Name Number Description 1. Quantum Solar Green Bonds Framework Green Bonds Framework of the Holding Corporation 2. Scatec Solar – Sustainability Framework Sustainability Framework of EPC, O&M, asset management contractor & stakeholder 3. Estimated production incl. COs Scatec Solar power production and CO2 abatement calculation 4. Scatec Solar Annual Report 2016 Annual report by EPC, O&M, asset management contractor & stakeholder 5. Malaysia Introduction & Structure Scatec Solar PPT slides, project overview 6. Environmental and social matters – Introduction and workshop Scatec ESIA Workshop PPT slides ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 8
  275. CICERO 3 Assessment of Quantum Solar ’s Green Bonds framework and environmental policies Overall, the Green Bonds Framework established by Quantum Solar provides a sound framework for investments in the three already selected projects. The framework and procedures for Quantum Solar’s Green Sukuk investments are assessed and their strengths and weaknesses are discussed in this section. The strengths of an investment framework with respect to environmental impact are areas where it clearly supports low-carbon projects, whereas the weaknesses are typically areas that are unclear or too general. Pitfalls are also raised in this section to note areas where issuers should be aware of potential macro-level impacts of investment projects. Eligible projects under the Green Bond Framework At the basic level, the selection of eligible project categories is the primary mechanism to ensure that projects deliver environmental benefits. Through selection of project categories with clear environmental benefits, Green Bonds aim to provide certainty to investors that their investments deliver environmental returns as well as financial returns. The Green Bonds Principles (GBP) state that the “overall environmental profile” of a project should be assessed and that the selection process should be “well defined”. Category Eligible project types Green Shading and some concerns Renewable energy Utility scale solar PV Dark Green  Lifecycle CO2 footprint of all projects is measured. Through “responsible procurement”, the issuer aims to keep the footprint light. Table 2 Eligible project categories Strengths Scatec Solar’s “Sustainability Framework” Quantum Solar will be the owner of the three solar power plants but Scatec Solar will have wide-ranging responsibilities. It will be responsible for the engineering, procurement, construction, operation, maintenance, ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 9
  276. CICERO and reporting on the three projects . Scatec Solar’s work in all of these activities will be guided by its own sustainability framework. This also applies to Scatec Solar’s sub-contractors. Scatec Solar describes the main pillars of this framework as being “1. Delivering competitive renewable energy, 2. Contributing to local value creation, 3. Being a trusted business partner”. On a more detailed level the framework aims to establish six of the UN’s Sustainable Development Goals, encompassing education, clean energy, economic development, sustainable land use, sustainable cities and cooperation, as “a solid tool to frame, define and materialize” all of Scatec Solar’s activities. Further, the framework aims to integrate environmental, social and governance (ESG) considerations into the project development phase. One example of this approach is that all projects are supposed to be developed in accordance with the IFC Performance Standards and the Equator Principles, considered to be international best practice. In this regards, Scatec Solar conducts Environmental and Social Impact Assessments for all its projects, even if, as in this case, this is not required under local law. Responsible procurement Another element of the framework is aimed at what is referred to as “responsible procurement”. This policy is based on a life-cycle approach, which takes into account the “total energy footprint from raw-materials to decommissioning” of all utility scale power plants. Scatec Solar takes thus into consideration their suppliers’ performance on transparency, environment and health & safety. Scatec Solar has developed its own ”Supplier Conduct Principles” and requires suppliers to commit to them. Compliance is monitored through audits of the most relevant suppliers and those that are at a high risk of breaching the principles. According to the information CICERO received, life-cycle metrics of the three projects will not be part of the annual reporting. Reporting Scatec Solar will follow the recommendations of the Green Bond Principles regarding reporting of quantitative performance measures. The produced electricity and abated CO2 will be reported per project, for all projects combined, and as a share equivalent to the Sukuk’s share of total project costs on an annual basis to bondholders and on a monthly basis to the banks arranging the issue. This cannot be seen as an external review, as the Green Bond Principles recommend, since reporting will be done by Scatec Solar under its asset management function. However, the metrics and method are in line with relevant recommendations. CICERO encourages the issuer to make these reports publicly available to increase transparency in the Green Sukuk market. Quantum Solar will also report to the arranging banks on the allocation of proceeds during the construction period on a monthly basis. Weaknesses We found no obvious weaknesses in Quantum Solar Park’s Green Bonds Framework. However CICERO encourages the issuer to make the impact reports publicly available to increase transparency in the Green Sukuk market. Pitfalls Impacts beyond the project boundary Due to the complexity of how socio-economic activities impact the climate, a specific project is likely to have interactions with the broader community beyond the project borders. These interactions may or may not be climate-friendly, and thus need to be considered with regards to the net impact of climate-related investments. . ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 10
  277. CICERO References IPCC (2013). Climate Change 2013: The Physical Science Basis, Fifth Assessment Report, Intergovernmental Panel on Climate Change ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 11
  278. CICERO Appendix : About CICERO CICERO Center for International Climate Research is Norway’s foremost institute for interdisciplinary climate research. We deliver new insight that helps solve the climate challenge and strengthen international climate cooperation. We collaborate with top researchers from around the world and publish in recognized international journals, reports, books and periodicals. CICERO has garnered particular attention for its work on the effects of manmade emissions on the climate and the formulation of international agreements and has played an active role in the UN’s IPCC since 1995. CICERO is internationally recognized as a leading provider of independent reviews of green bonds, since the market’s inception in 2008. CICERO received a Green Bond Award from Climate Bonds Initiative for being the biggest second opinion provider in 2016 and from Environmental Finance for being the best external review provider (2017). CICERO Second Opinions are graded dark green, medium green and light green to offer investors better insight in the environmental quality of green bonds. The shading, introduced in spring 2015, reflects the climate and environmental ambitions of the bonds in the light of the transition to a low-carbon society. CICERO works with both international and domestic issuers, drawing on the global expertise of the Expert Network on Second Opinions. Led by CICERO, ENSO is comprised of trusted research institutions and reputable experts on climate change and other environmental issues, including the Basque Center for Climate Change (BC3), the Stockholm Environment Institute, the Institute of Energy, Environment and Economy at Tsinghua University and the International Institute for Sustainable Development (IISD). ENSO operates independently from the financial sector and other stakeholders to preserve the unbiased nature and high quality of second opinions. CICERO.oslo.no/greenbonds ‘Second Opinion’ on Quantum Solar Park’s Green Bonds Framework 12
  279. QUANTUM SOLAR PARK (SEMENANJUNG) SDN BHD Green SRI Sukuk of up to RM1.00 Billion in Nominal Value Information Memorandum ISSUER Quantum Solar Park (Semenanjung) Sdn Bhd (Company No. 1200950-D) Unit 30-01, Level 30 Tower A, Vertical Business Suite Avenue 3, Bangsar South No. 8 Jalan Kerinchi 59200 Kuala Lumpur PRINCIPAL ADVISER CIMB Investment Bank Berhad (Company No. 18417-M) Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia JOINT LEAD ARRANGERS / JOINT LEAD MANAGERS CIMB Investment Bank Berhad (Company No. 18417-M) Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia Maybank Investment Bank Berhad (Company No. 15938-H) 32nd Floor, Menara Maybank 100 Jalan Tun Perak 50050 Kuala Lumpur Malaysia SHARIAH ADVISER CIMB Islamic Bank Berhad (Company No. 671380-H) Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia FACILITY AGENT/SECURITY AGENT CIMB Investment Bank Berhad (Company No. 18417-M) Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia SUKUK TRUSTEE FINANCIAL ADVISER Pacific Trustees Berhad (Company No. 317001-A) Unit A-9-8, 9th Floor Megan Avenue 1 189, Jalan Tun Razak 50400 Kuala Lumpur. CIMB Investment Bank Berhad (Company No. 13491-P) Level 17, Menara CIMB Jalan Stesen Sentral 2 Kuala Lumpur Sentral 50470 Kuala Lumpur Malaysia SOLICITORS TO THE PRINCIPAL ADVISER, JOINT LEAD ARRANGERS AND JOINT LEAD MANAGERS Adnan Sundra & Low Level 11, Menara Olympia No. 8, Jalan Raja Chulan 50200 Kuala Lumpur Malaysia SOLICITORS TO THE ISSUER Zaid Ibrahim & Co Level 19, Menara Milenium Jalan Damanlela, Damansara Town Centre 50490 Kuala Lumpur Malaysia