Alumina News - Market

GE puts Worsley Alumina power plant on market

www.theaustralian.com.au
General Electric is believed to be fielding approaches from major infrastructure investors interested in buying its $1.2 billion Worsley Alumina power plant, following plans by the conglomerate to float the West Australian asset on the Australian Securities Exchange.

The interest from groups — ­believed to be industry players, private equity or potential superannuation funds such as Australian Super or the Future Fund — means a trade sale, rather than an initial public offering, is the likelier outcome for Worsley, a multi-fuel plant near Collie, 189km southeast of Perth.

Listed industry players such as Duet, APA and Envestra could be potential suitors.

Bullish prices have been paid in recent infrastructure asset sales, and listed companies in the energy infrastructure sector such as Duet Group, APA and takeover target Envestra have all rallied in recent months.

It is understood GE’s move to float or sell the Worsley plant is driven by the limited availability of high-yielding listed infrastructure investment opportunities.

The managing director of Sirius Fund Management, Kieran Kelly, said that should the asset be subject to an IPO, it would be of ­interest to his company, subject to price.

The fund manager already ­invests in listed infrastructure companies, including APA, Transurban and Sydney Airport, and likes infrastructure as an asset class.

“We like assets that have a bit of economic protection around them — that is, that they tend to be monopolies reasonably well shielded from competition,” he said.

“We’d like more infrastructure of the right type.”

Worsley powers one of the world’s largest alumina refineries, BHP Billiton’s Worsley Alumina, and was built to meet its expansion requirements.

It has been positioned for a potential IPO through Macquarie Capital, with a $1.2bn-$1.3bn enterprise value and a market value between $484 million and $512m, as revealed by The Australian last week.

The plant is a two-unit multi-fuel cogeneration plant with a ­capacity of 550tph of steam and 104MW of electricity.

It is 86 per cent-owned by BHP, and it has a 25-year “take or pay” contract with Worsley Alumina, its main customer, with prices pegged to inflation.

The yield generated from the asset is expected to be 8-9 per cent for the 2015 financial year. Previously, it was in the hands of Griffin Group, the company of embattled coal baron Rick Stowe, which was selected in 2006 following a competitive bid process for the development of the ­Worsley plant.

Completed in January, it is now fully owned by GE Energy Financial Services.

The asset is up for sale as strong interest is also expected to be shown for billions of dollars’ worth of government power assets earmarked for sale after state elections in the coming months.

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