Inter Far East Engineering (IFEC) is seeking to terminate a memorandum of understanding to acquire W Solar Co, a subsidiary of Wyncoast Industrial Park, because of changes in specifications and the obligation to bear additional expenses.
Wyncoast, meanwhile, has decided to sell W Solar to Compass East Industry (Thailand) Co for Bt80 million.
According to Wyncoast Industrial Park’s deputy chief executive officer, Koranun Sukonritikorn, Wyncoast sold its stake in W Solar Co to IFEC as reported to the Stock Exchange of Thailand last April 27. The contractual parties agreed to the following terms and conditions.
Wyncoast and its subsidiary established a lease contract and registered the right to lease rooftop space for 25 years at the equivalent of 20 per cent of revenue from the monthly electricity fee of the company, together with the provision of insurance for the building and the roof structure of Building W2 in Chachoengsao province.
Wyncoast has completed the construction of the solar-power plant on the leased rooftop space. The solar-cell panels have a warranty of at least 25 years. Building-construction and factory-operation permits were also acquired.
After the signing of the MoU, Wyncoast entered a contract with the subsidiary to provide service for the roof of Building W2 for 25 years. It has proceeded with the construction of a solar-power plant on the rooftop in accordance with a stipulation in the MoU to allow the buyer to establish a share-purchase contract and pay the second instalment of Bt20 million.
Wyncoast requested payment of the second instalment last November 20 and December 26, but the buyer requested changes in the specifications in addition to the ones Wyncoast made with the contractor. Wyncoast proceeded to with the changes as requested by the buyer until the contractor said that if the buyer wanted to make more changes, it must pay the instalment first.
Wyncoast has made the necessary preparations via a meeting with the Provincial Electricity Authority (PEA), and the Energy Regulatory Committee inspected the construction of the solar plant on January 13. However, on February 5, Wyncoast received a letter from the buyer requesting termination of the MoU to buy the shares in W Solar Co. Wyncoast issued a letter terminating the MoU on February 6.
Both parties of the MoU will review its terms and conditions, and Wyncoast will inform investors about this matter when a conclusion has been reached.
Koranun said on Monday that the Wyncoast board of directors had approved the sale of 8 million common shares (Bt10 per share, totalling Bt80 million) in W Solar Co to Compass East Industry (Thailand), or CEI.
Wyncoast will use the proceeds to raise its registered capital to facilitate the repayment of debt related to the items leftover after the construction of the rooftop solar plant. All of this will have to follow the signing of an MoU with CEI, which should be completed after CEI obtains shareholders’ approval at their next meeting.
W Solar Co was established on February 24, 2014, to engage in electricity generation and power distribution via a solar plant installed on the roof of Building W2 in Chachoengsao province (as per the rooftop-area lease contract between Wyncoast and its subsidiary for a period of 25 years). W Solar has a contract to supply electricity to the PEA of not more than 1 megawatt.
The power plant will be able to supply electricity on a commercial basis this quarter.