Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Meridian mulls quitting stake in Australian wind farm

Meridian mulls quitting passive stake in Australian wind farm

By Pattrick Smellie

Jan 8 (BusinessDesk) - Meridian Energy is considering the sale of its 50 percent stake in the A$1 billion Macarthur wind farm in the Australian state of Victoria to book gains made available by the global drop in interest rates.

The state-owned enterprise's chief executive, Mark Binns, told BusinessDesk the company stood to earn a "bond-like" return over the 25 year life of its joint venture arrangements for the massive 420 megawatt wind farm, which it is building with Australian energy generator and retailer AGL.

The project is expected to be producing full power early this year and will be the largest in the southern hemisphere.

Meridian won an international award for the way the finance arrangements were structured in a ground-breaking deal announced in September 2011 under previous CEO Tim Lusk, whom Binns replaced almost a year ago.

"The way Macarthur is structured, we don't participate in the ups and downs of the electricity market," said Binns, who confirmed Meridian was "considering exiting" its stake in talks that include AGL. "It's an AGL risk. It doesn't totally fit with our strategy."

By comparison, its 70MW Mt Millar wind farm in South Australia is wholly-owned and operated by Meridian.

A timeframe for decisions was uncertain, but "not imminent," he said.

"We can stay in the 25 year deal, or we can look at selling. While interest rates are low, there's a profit to be made."

He would not be drawn on whether an exit from Macarthur could see a capital return to the government ahead of the proposed partial privatisation of Meridian, the most valuable of the three SOE power companies, independently valued at $6.5 billion in 2011 in work undertaken for the Treasury's Crown Ownership Monitoring Unit.

Assuming legal challenges are overcome, the sale of up to 49 percent of MightyRiverPower is planned in the second quarter of this year, with a second partial float of either Meridian or Genesis Energy possible by the end of the year.

Treasury papers released over the Christmas break warned the government that capital markets would struggle to absorb three partial SOE floats in one year.

There was "no link" between thinking on Macarthur and the asset sales programme, said Binns, and capital returns from the partially debt-funded investment could be used for balance sheet strengthening.

He declined to comment on the extent of debt and equity components in the Macarthur funding arrangements, although statements at the time of the deal cited "term facilities totaling A$386 million to complete Meridian’s funding commitment to the project."

"The addition of the Macarthur investment to Meridian Energy Australia’s portfolio of operating and development assets represents a further step in developing Meridian Energy Australia as an integrated energy participant in the Australian market," the company said at the time.

As well as Mt Millar, Meridian is due to start construction of a wholly-owned 131MW wind farm at Mt Mercer, in Victoria. The company's website says construction was due to start last month, with first power forecast in 2014.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Media: Julian Wilcox Leaves Māori TV

Māori Television has confirmed the resignation of Head of News and Production Julian Wilcox. Mr Maxwell acknowledged Mr Wilcox’s significant contribution to Māori Television since joining the organisation in 2004. More>>

ALSO:

Genetics: New Heat Tolerant Cow Developed

Hamilton, New Zealand-based Dairy Solutionz Ltd has led an expert genetics team to develop a new dairy cow breed conditioned to thrive in lower elevation tropical climates and achieve high milk production under heat stress. More>>

Fractals: Thousands More Business Cards Needed To Build Giant Sponge

New Zealand is taking part in a global event this weekend to build a Menger Sponge using 15 million business cards but local organisers say they are thousands of business cards short. More>>

Scoop Business: NZ Net Migration Rises To Annual Record In September

New Zealand’s annual net migration rose to a record in September, beating government forecasts, as the inflow was spurred by student arrivals from India and Kiwis returning home from Australia. More>>

ALSO:

Scoop Business: Fletcher To Close Its Christchurch Insulation Plant, Cut 29 Jobs

Fletcher Building, New Zealand’s largest listed company, will close its Christchurch insulation factory, as it consolidates its Tasman Insulations operations in a “highly competitive market”. More>>

ALSO:

Scoop Business: Novartis Adds Nine New Treatments Under Pharmac Deal

Novartis New Zealand, the local unit of the global pharmaceuticals firm, has added nine new treatments in a far-ranging agreement with government drug buying agency, Pharmac. More>>

ALSO:

Crown Accounts: English Wary On Tax Take, Could Threaten Surplus

Finance Minister Bill English is warning the tax take may come in below forecast in the current financial year, as figures released today confirm it was short by nearly $1 billion in the year to June 30 and English warned of the potential impact of slumping receipts from agricultural exports. More>>

ALSO:

Get More From Scoop

 
 
Standards New Zealand

Standards New Zealand

Mosh Social Media
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news