Transfield Nabs Qld Power Asset
The Age
Saturday June 10, 2006
TRANSFIELD Services is ready to wave goodbye to its infrastructure assets and launch a listed trust after paying $281 million for 37.5 per cent of Gladstone power station and 100 per cent of the company that runs it.
Darce Corsie, earmarked to become chief executive of the infrastructure vehicle when it is floated later this year, said the company would have more than $1 billion worth of infrastructure assets to roll into the fund. The size of the equity raising had not yet been determined. Transfield is adapting its infrastructure assets and refinancing $450 million in debt as a precursor to the float.Mr Corsie said there might be further assets to add to the infrastructure trust by the time it floated, as the company had tenders in progress in areas including water, transport and public-private partnerships. A number of non-power assets, such as water and transport, were being considered for inclusion in the infrastructure trust. It has been a big week for Transfield. The power station buy came the day after the announcement of its $372 million purchase of American management services provider US Maintenance.Transfield chief executive Peter Watson said the two purchases showed that the company was giving momentum to its strategy of developing its two business arms: infrastructure and management, and operations services. Its operations covered a wide range of areas, including the oil industry, transport, water, power and communications. Expansion was planned in North America and the Middle East, Mr Watson said."I wouldn't be ruling out other acquisitions internationally as we continue to grow," he said.The Gladstone purchase brings Transfield's generation portfolio to five, with two others in north Queensland and two in Western Australia."This significant acquisition increases the size of our existing business, yet maintains the current risk profile given the contracted nature of the Gladstone asset," Mr Watson said.Transfield will initially fund the purchase totally with debt. Mr Watson did not say what would happen after this initial period, but presumably some equity will be injected into the asset after the infrastructure float. Equity raising to help fund Thursday's US Maintenance purchase is also expected this year.Transfield bought the power station from NRG, which is exiting Australia after selling its South Australian power station, Finders, to Babcock & Brown. Comalco will be the other major partner in the 680-megawatt power station, which is contracted to supply a major aluminium smelter with power until 2029. Transfield's share price has been on a roller-coaster in the past year at $7.57, rising, falling and till recent days, trading very close to that starting point. News of the two purchases has pushed the shares up hard. It closed yesterday evening up 8.2 per cent to $8.17. The company was originally spun out of the Belgiorno-Nettis private engineering empire in the 1990s.KEY POINTS ? Transfield buys power assets ahead of market float.? It bought a US management service on Thursday.? The infrastructure trust has tenders for transport and water.
© 2006 The Age
