KUALA LUMPUR (May 9): Passenger vehicle charterer G Capital Bhd (formerly known as Gunung Capital Bhd) on Monday signed a 25-year solar power purchase agreement (PPA) with two of Chin Well Holdings Bhd's units for a 5.38 MWp solar photovoltaic (PV) generating system in Bukit Mertajam, Penang.

In a bourse filing, G Capital's 70%-owned subsidiary Solarcity Malaysia Sdn Bhd will design, construct, instal, own, operate and maintain solar PV energy generating system with a capacity of 2,380.32 KWp and 3,000.24 KWp, respectively, for Chin Well Fasteners Co Sdn Bhd and Chin Herr Industries (M) Sdn Bhd, aggregating a total capacity of 5,380.56 KWp.

Electricity generated from the solar PV systems installed will be sold to Chin Well at an agreed selling price, which translates into earnings of G Capital's solar energy division after deducting the associated cost, the company's spokesperson explained.

According to the filing, both plants are expected to achieve the commercial operation date by the fourth quarter of 2022, and thereafter are expected to contribute positively to the future earnings of the group.

"The installation of the solar power generating facilities shall reduce Chin Well's energy expenditure and their carbon footprint, which is in line with Malaysia's renewable energy agenda.

"With this winning of 5.38 MWp PPA, Solarcity has bagged a total of 30.75 MWp PPA since G Capital assumed 70% ownership February last year," said G Capital executive director Datuk Yap Yee Ping in a separate statement.

Yap noted that the signing of these two PPAs augurs well with the group's proposed rights issue of redeemable convertible unsecured loan stocks (RCULS).

"Upon full subscription of the RCULS, up to RM4.8 million of the proceeds will be used to part-finance the solar PV systems for these two PPAs.

"With bank project-financing facility funding the remaining of the project costs, we are expecting these two solar PV systems to reach commercial operation date by October 2022 and contribute positively to the group's cash inflows and earnings thereafter," she said.

Yap added that the group obtained its shareholders' nods to the proposed rights issue from the extraordinary general meeting taken place on April 27 this year and is optimistic about eventual full subscriptions from the shareholders.

"We are confident that utilisation of proceeds from the proposed rights issue to completing the solar PV projects and mini-hydropower projects will be able to maximise shareholders' value," she added.

Since venturing into the solar energy sector in February last year, G Capital has powered a total of 8.3 MWp solar PV systems, which would start contributing to the group's sustainable and recurring cash flow from this year onwards.

The first solar PV system was powered up in September 2021 for De-Luxe Food Services Sdn Bhd (1.1 MWp), followed by Muda Pasifik Sdn Bhd (1.2 MWp in January 2022), Muda Paper Mills Sdn Bhd (3 MWp in February 2022) and Muda Paper Converting Sdn Bhd (3 MWp in March 2022).

G Capital's share price dropped one sen to close at 59 sen, bringing a market capitalisation of RM189 million.