babcock finds suitors for wind farms

http://business.smh.com.au/babcock-finds-suitors-for-wind-farms-20080618-2sja.html

Babcock finds suitors for wind farms

18, 2008 - 12:45PM

Babcock & Brown's wind power affiliate may get as much as $3 billion ($3.2 billion) for European assets, in a sale that could alleviate concern about the asset manager's ability to repay debt.

First round offers for Babcock & Brown Wind Partners' energy projects were due on Monday, said three people with knowledge of the plan, declining to be identified as details are private.

Union Fenosa is among companies and infrastructure funds that submitted bids, the people said.

Babcock & Brown jumped as much as 12% in Sydney trading on optimism a sale may help satisfy bankers that it can repay $2.8 billion of loans. The company is relying on the sale to restore investors' confidence after a stock rout cut its market value in half the past week.

"As long as Babcock is taking proactive action to reduce debt it's heading in the right direction,'' said Angus Gluskie of White Funds Management in Sydney. "The company can survive, and investors will have to ride this out.''

Jonathan Mott, an analyst at UBS in Sydney, estimated the sale of the European wind assets would have a "significant'' impact on Babcock's business, adding up to $300 million to net profit this year.

Iberdrola is also interested in the assets, though its priority is carrying out an existing investment plan, said a spokeswoman for the company in Madrid yesterday.

Fenosa is following the process as part of its strategy to expand in renewable energy at home and abroad, a Fenosa official said.

Babcock, Australia's second-largest securities firm, said Monday it expects first bids this week, and is confident it will sell the European wind assets by the third quarter of this year.

The Sydney-based firm's shares were up 12% at $6.64 around midday. Babcock Wind were unchanged at $1.64 after jumping 5.5% yesterday.

Babcock Wind said in February it may sell ventures in Europe, including the Enersis business in Portugal, to benefit from increased valuations for projects that aren't reflected in its share price in Australia.

The company owns about 831 megawatts of wind energy generation capacity in Spain, Portugal, Germany and France. It hired Deutsche Bank and JPMorgan Chase to manage the sale.

Some bidders lodged offers for part of the portfolio, according to one of the people. Completion of the sale is likely by the end of the third quarter.

"Energy providers want to reduce their carbon dioxide emissions, and they're doing that by investing in renewable energy,'' said Ruxandra Haradau-Doeser at Bankhaus Metzler in Frankfurt.

Babcock Wind, one of 13 listed Babcock funds, said in the same month it's the world's fifth-biggest wind energy company in terms of installed capacity. Its parent Babcock in December 2005 bought Enersis for 490 million euros before selling half of it to the wind fund.

Babcock Wind spent $1.78 billion on acquisitions and new projects in last year's second half, boosting generation capacity about 67%.

RWE, Germany's second-largest utility, may also be interested, the people said. RWE Innogy spokesman Konrad Boecker declined to comment on whether the company bid.