Tuesday, 19 April 2011

Japanese in $1.2bn Griffin power buy

Weekend Australian
9 April 2011, Page: 27

TWO Japanese energy giants have joined forces to buy failed tycoon Ric Stowe's Bluewaters power stations in Western Australia, in a deal worth about $1.2 billion. The administrator of Mr Stowe's Griffin Group, KordaMentha, confirmed yesterday that power utility Kansai Electric Power and conglomerate Sumitomo Corporation had agreed to buy the coal fired stations at Collie, 200km south of Perth.

It is Kansai Electric's first move into the Australian power generation sector and its second major investment in Australia after it grabbed a 5% stake in Woodside Petroleum's $14bn Pluto gas project in 2008. Sumitomo already owns a 70% interest in a gas fired power plant, formerly owned by Babcock and Brown, at Kwinana, south of Perth.

The sale price for the Bluewaters power station assets was not disclosed but sources indicated it was just under $1.2bn, which would represent an excellent result for creditors who stand to reap almost 100¢ in the dollar since the collapse of Mr Stowe's empire in January last year The complex two stage transaction will involve the Japanese companies each emerging with a roughly 50% stake in Griffin Energy. The sale requires approval from creditors who are mostly international bondholders and is expected to be completed within two months.

In a statement, KordaMentha administrator Scott Kershaw said: "The purchasers are high quality counter parties who have substantial investments in power generation on a global basis". The deal means the only assets of Mr Stowe's still to be offloaded are the Emu Downs wind farm and the former magnate's sprawling retreat at Bullsbrook, on the outskirts of Perth, which was once valued at $70 million. A sale of Emu Downs, about 200km north of Perth, is expected to proceed in the next few weeks.

Another Japanese company, Eurus Energy, is considered a leading bidder to acquire the asset, which is expected to fetch about $200m. Emu Downs is a joint venture between Griffin Energy and Queensland's Stanwell Corporation. The reclusive Mr Stowe, who spends most of his time in Monaco, is not expected to see a significant return from the breakup and sale of his empire. "The enterprise value of the Griffin Group is nothing, said one source yesterday.

Financial advisers from Macquarie Bank and UBS worked on the Bluewaters power station transaction. The sale of the power stations comes after Indian infrastructure giant Lane.° Infratech agreed to buy Mr Stowe's Griffin Coal in December last year for about $8.30m and revealed it planned to spend a further $1bn on a major expansion of the Collie mines. The Indian owned Griffin Coal will now supply the Japanese controlled Bluewaters power stations. Mr Stowe's Griffin Group collapsed in January last year with more than $1bn in debt linked to its development of the power stations.