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AUSTRALIA: February 1, 2005
MELBOURNE - Australian renewable energy group Pacific Hydro Ltd. said on Monday it has received at least six non-binding bids for the company, with about half the offers from international parties.
Shares in Pacific Hydro, which has market value of about A$700 million ($540 million), have surged 40 percent since it said in late October it had received a number of unsolicited approaches and had appointed advisers Carnegie, Wylie & Co. to conduct a strategic review.
"I believe at least half a dozen non-binding bids have been received and around half of those we believe are from international parties," Managing Director Jeff Harding told Reuters.
Pacific Hydro, which has 227 megawatts (MW) of installed wind power and hydroelectricity assets in Australia, Fiji, the Philippines and Chile, is being marketed on its potential to generate millions of tonnes of sought-after carbon credits.
Based on development projects in the pipeline, Harding estimated that by 2010 Pacific Hydro could produce up to 2.5 million tonnes of carbon credits per year. He said the credits were currently trading between 8.5 and 9 euros per tonne.
Investment bankers said the three international parties believed to have lodged bids by Friday's deadline were Japan's Mitsui & Co Ltd. with British utility International Power, Tokyo Electric Power Co. (TEPCO) and Spanish renewable energy company EHN. EHN is controlled by construction company Acciona
They said Australian-based companies believed to have submitted bids included investment and advisory firm Babcock & Brown Ltd, Hastings Funds Management and Australia's largest listed investment bank, Macquarie Bank Ltd.
But some bankers have also expressed scepticism over the level of genuine interest in Pacific Hydro, one saying he believed only one of the interested parties had appointed an adviser.
Carnegie, Wylie & Co. declined to comment on the bidding process, including speculation a winning bid would come in at around A$6.50 a share -- a 46 percent premium to Friday's closing price -- which would value the company at A$989 million..
"You would have to have some fairly aggressive assumptions in place to get a valuation that high," said Scott Kelly, an analyst with Wilson HTM. Pacific Hydro shares were trading up 3.4 percent at A$4.60 by noon on Monday in a slightly firmer overall market.
Harding said he expected a short list of bidders would be drawn up in coming weeks and a final decision on a winning bid made some time in the first quarter.
"There is no hard and fast timetable," Harding said.
Pacific Hydro is 16 percent owned by US utility giant American Electric Power Co. Inc (AEP) and 34 percent owned by Development Australia Fund.
Ohio-based AEP, which has been shedding offshore assets to reduce debt, said on Dec. 2 last year it was still looking to sell its stake in the Australian company.
Story by Joanne Collins
REUTERS NEWS SERVICE
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