I think it is logical to assume they will invite partners to subscribe for new shares in KDP and will produce a financial model to justify the asking price. That way they will avoid a tax liability. The question is what model will the incoming party support. Saddle Hills is a tough ask as it requires faith in the peaker model which can only be built on historical numbers.The 2001 actual numbers they gave us indicates it would have generated EBIDA of $28 million indicating a payback of 3.5 years.KPO may get debt for 40 per cent of the $105 million required.But its a big equity punt. The large scale 200 to 400 MW plants are more certain as they would involve gas tolling agreements and power purchase contract which could carry 75 per cent debt.But they will take a minimum of 18 months to be shovel ready. KDP is a perfect vehicle for a group looking to get into the power space and the ground floor on carbon capture and sequestration. It will all now depend on the quality of the chosen financial adviser and the sales document. I think we are not going to see or hear much for 4 weeks.
KPO Price at posting:
1.4¢ Sentiment: Buy Disclosure: Held
