Fund gets wind up over carbon

Age
Thursday 14/10/2010 Page: 2

Transfield Services Infrastructure Fund says it will consider all "sensible offers" for its stake in the Loy Yang A coal-fired power station to focus on developing its renewable energy assets. Speaking at the fund's annual meeting yesterday, chief executive Steve MacDonald said the looming introduction of a carbon price was weighing on the fund's share price. TSI owns significant power and renewable-energy infrastructure, including a stake in Collinsville Power Station in Queensland.

The fund yesterday announced a $8.6 million net increase to its 2011 earnings guidance to $104 million after the successful concession extension and refinancing of its Macarthur water-filtration plant. "If there is carbon legislation hanging over these, it will be very difficult to say 'here are the future earnings of these plants'", Mr MacDonald said. TSI's shares closed up 0.050 at 66.5¢ yesterday about a third of its listing price in 2007.

Like most in the energy industry, TSI was keen for a decision on a carbon price, Mr MacDonald said. But he believed that TSI was "substantially protected" from any negative financial impacts of a tax because of the long-term contracts its wholly owned assets held. TSI chairman Peter Young said Loy Yang A, in Traralgon, in which TSI has a 14% stake, was one of the fund's "non-core assets".

Mr Young defended TSI's $28 million loss on the $191 million sale of its Mount Millar wind farm in South Australia in May, saying it was "an accounting treatment". Mr MacDonald said TSI is still intent on expanding its wind farm portfolio, a key element of the fund's long-term growth strategy. TSI reaffirmed its distribution guidance of 8.20 per security at least for the "medium term".