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posted on:
June
23
2017

Final bid date set for Engie's Loy Yang B

 

Source: Financial Review



With coal power generation causing heated debate in Canberra, the level of interest in one of the country's older coal plants is notable.


A final bid date for Engie's Loy Yang B generator has been set for August 29, with suitors short-listed after last month's indicative offers now immersed in the data room.


Both new Alinta Energy owner Chow Tai Fook Enterprises and privately owned Delta Energy are understood to be through to the next round of the Rothschild-run sale process, with private equity giant Blackstone still in the mix.


Delta - owned by interests held by power industry maverick Trevor St Baker and advised by Goldman Sachs - is thought to have tied up with a strong partner and is keenly pursuing a bid that would see the 953 megawatt brown coal generator drawn into a portfolio that already includes the Vales Point coal generator in NSW. With the big three power players standing firmly on the sidelines for any coal power station these days, the field is relatively clear for Delta & Co and Alinta to battle it out, although China Resources is also said to be there.




Thailand's biggest coal producer Banpu is understood to have been weeded out after the indicative bid stage, while Denham Capital also had a look  but didn't go ahead.


The plant is expected to fetch about $1 billion, although some say up to $1.5 billion could be warranted depending on your view of electricity prices over the medium to longer term. Certainly the wholesale prices in recent months are backing a bullish outlook, with few experts expecting much moderation over the next few months.


Loy Yang B, which generates about 10 per cent of Victoria's power, is 30 per cent owned by Japan's Mitsui & Co. which is working with Paris-listed Engie for a 100 per cent sale. The asset is being pitched as a strong cash flow-generating business with a life still of about 30 years.


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