Marubeni/TEPCO will pay $ 3.4 B for Mirant RP assets
Tuesday, December 12, 2006
By YUKO INOUE and OSAMU TSUKIMORI
TOKYO, Dec1 1 (Reuters) — Tokyo Electric Power Co. (TEPCO) and Marubeni Corp. said on Monday they would buy Mirant Corp.’s power assets in the Philippines for $ 3.42 billion in what would be the Philippines’ biggest ever takeover.
The two firms outbid Malaysia’s Tanjong Plc and OneEnergy Ltd., a partnership between Hong Kong’s CLP Holdings and Japan trader Mitsubishi Corp. among others in the auction, which had generated substantial buying interest due to the prospects of stable returns under the long-term power purchase agreements.
TEPCO, Asia’s biggest utility, said the deal is its largest investment abroad.
"We’ll learn a lot about cost cutting. We’ll bring back the know-how we acquired from overseas projects to Japan," said Koji Nishimura, general manager at TEPCO’s international affairs department.
The announcement came after sources told Reuters on Monday that Mirant picked up Marubeni and TEPCO as a winning bidder.
US electricity producer Mirant is selling 2,203megawatts of power generating assets in the Philippines, the biggest independent power generator in the country, in the latest of series of auctions in the region by US power firms.
Credit Suisse is the financial advisor for Mirant on the sale.
Marubeni, Japan’s fifth biggest trading company, said it and TEPCO aimed to use non-recourse loan from banks to raise about 75 percent of the required funds for the debt plus equity package deal. The loan limits the lender’s rights to the particular asset being financed.
The two companies may also issue sub-debts to third parties and reduce their equities after talks with banks are finalised.
UBS analyst Toshinori Ito said that he did not know whether the purchase price was high because the key information such as the cash flow or the profit figures were not revealed.
"There is no way of knowing how much return is going to be earned through the investments," he said.
The market had initially expected the assets to be worth around $ 2.5 billion.
Japanese investors were particularly aggressive bidders because they have identified the power sector as key to their growth and because they are backed by Japan Bank for International Cooperation which provides them with cheap long-term funding.
Top trading companies are particularly keen to win overseas power contracts as the sector generates a steady cash flow, offsetting the highly cyclical resources industry in which they have substantial investments.
Marubeni said the deal would boost its net overseas power generation capacity to about 4,000 MW, by adding Mirant’s 1,000 MW capacity in the Philippines.
The company plans to more than double its overseas power generation capacity to up to 5,000 megawatts by 2008 through acquisitions and investment in new projects and has said it would invest $ 200-$ 300 million a year in the run-up to 2008.
TEPCO has already invested in seven thermal power projects in five countries.
posted by philpower @ 2:50 PM,
