Administrators race to sell Griffin Coal's $1.2bn power station

Australian
14 February 2011, Page: 21

ADMINISTRATORS for Ric Stowe's Griffin Coal will launch a rapid sale process next month for the failed tycoon's $1.2 billion Bluewaters Power Stations and $200 million Emu Downs Wind Farm in Western Australia. Bidders from Australia, Asia and North America are already on the shortlist to buy the highly geared Bluewaters Power Station assets after initial expressions of interest were called last year, meaning the auction is expected to be completed quickly.

But it is unclear how investor uncertainty over the Gillard government's plans to introduce a form of carbon pricing could weigh on the sale of the coal fired Bluewaters Power Station (I and II), near Collie in WA's southwest. Bidders for the Emu Downs Wind Farm a joint venture between Griffin Energy and Queensland government owned Stanwell Corporation could include renewable power company Infigen Energy and Japan's Eurus Energy.

The auction of the energy assets comes after Indian infrastructure giant Lanco Infratech, which bought Mr Stowe's Griffin Coal in December for about $830m, revealed it planned to spend a further $1bn on a major expansion of the Collie mines. Lanco chief financial officer Suresh Kumar told India's Economic Times last week the group planned to ramp up production at Griffin Coal from 5 million tonnes a year to about 18 million by 2015. The company plans to export much of the coal to India where it aims to increase its power generation capacity from 2,100 MWs to 15,000 MWs by 2015.

Despite Lanco's involvement in power generation, it is not considered a contender to pickup the Bluewaters Power Station assets. Last week it also ruled out bidding for a controlling stake in Gina Rinehart's Kevin's Corner coal project in Queensland. Settlement of the Griffin Coal deal is expected within days and the sale should be approved by creditors at a meeting by the end of the month, paving the way for bidding to open for the rest of Mr Stowe's empire early next month.

Administrator Mark Mentha, of KordaMentha, said he believed the auction for the energy assets which are believed to have about $12bn of debt tied to them could be completed within a couple of months because the process was quite advanced. He said Mr Stowe's Bluewaters Power Stations were being auctioned separately to the mines because of the need to first put in place a coal supply deal with Lanco. Griffin Coal supplies coal to the 400 MW power station, which is owned by subsidiary Griffin Energy and is the first privately owned coal fired power station in WA.

The Foreign Investment Review Board approved the Lanco deal in December, within days of it being submitted, Mr Mentha said. The financial advisers on the Bluewaters Power Station sale are UBS and Macquarie Capital Advisers. The 80 MW Emu Downs Wind Farm is located at Cervantes, about 200km north of Perth. Griffin Coal went into administration in January last year after it defaulted on a payment to the Australian Taxation Office.