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AGL leads $2.4bn power plant bid
CNN's Geoff Hiscock, Asia Business Editor
SYDNEY, Australia (CNN) -- A consortium led by Australia's biggest energy retailer, Australian Gas Light Co (AGL), is to buy a 2000-megawatt power station in Victoria state for about Aust. $3.5 billion ($2.4 billion). Most of the implied purchase price is debt. AGL said Thursday its equity investment would be A$200 million ($136 million). AGL said its Great Energy Alliance consortium, which includes Japan's Tokyo Electric Power Co (TEPCO), has entered into a conditional share sale agreement to buy the Loy Yang A power station and an adjacent coal mine. The Loy Yang site is about 165 kilometers (100 miles) from Melbourne, the Victorian state capital, and Australia's second largest city. AGL and TEPCO will each hold 35 percent of Loy Yang Power, with the remaining 30 percent held by a group of investors led by the Commonwealth Bank of Australia. Loy Yang, the biggest power station in Victoria, was privatized in 1997 by the Victorian government, which sold it to its current owners, U.S. utilities CMS Energy, NRG Energy and Horizon Energy, for about A$4.9 billion. CMS holds 49.6 percent, Horizon has 25 percent and NRG has 25.4 percent. NRG has filed for Chapter 11 bankruptcy protection in the United States. Loy Yang owes about A$3.47 billion and is due to make a A$500 loan repayment on July 11. Horizon said it would net about A$35-$37 million from the sale, suggesting the three owners in total would raise from A$140-$150 million. The sale to the AGL consortium is conditional on Loy Yang's lenders agreeing to a debt restructure, approval from the Australian competition regulator, and from investors in Horizon and the NRG Energy creditors committee. AGL managing director Greg Martin said in a statement to the Australian Stock Exchange on Thursday that Loy Yang Power had a strong future and was an "attractively priced asset" at an implied purchase price of A$3.5 billion. Loy Yang, which accounts for 24 percent of Victorian power generation capacity, will continue to trade with all electricity retailers, including AGL. The power station's brown coal mine is the largest in Australia and has enough reserves to supply it for more than 45 years. AGL said it hopes to complete the transaction by September 2. However that will depend in particular on the attitude of the Australian Competition and Consumer Commission's new chairman, Graeme Samuel. AGL is Australia's biggest energy provider, delivering electricity, natural gas and liquefied petroleum gas to more than 2 million customers in Victoria, New South Wales, Queensland and South Australia.
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