Half a dozen interested bidders include some who lost in the Tuas sale
Ronnie Lim, Business Times 8 Jul 08;
(SINGAPORE) The country's largest generating company (genco), Senoko Power - which supplies about 30 per cent of total electricity needs here - is now up for sale.
After an almost four-month hiatus since Temasek Holdings first sold Tuas Power for a whopping $4.235 billion to China Huaneng Group in mid-March, it launched its second genco sale yesterday. There remains only PowerSeraya to be offered to the market.
The sale of the 3,300 MW Senoko comes despite resurgent fears of more fallout from the global credit crunch, including the threat of stagflation in some economies in the second half.
Still, in announcing the latest sale, Temasek's managing director of investment, Wong Kim Yin, said: 'We have received strong indications of interest from potential bidders in this transaction.'
Besides, it 'is a continuation of Temasek's plan to divest all of our three gencos', he added, saying: 'This will provide an orderly transition to a competitive yet stable power generation market in Singapore.'
Temasek, in its announcement, also stated an important proviso, that 'as with the sale of Tuas Power, the sale of Senoko will be subject to acceptable price and commercial terms'.
As was the case with Tuas earlier, the Senoko sale will also be carried out in two stages, a Temasek spokesman confirmed. This comprises a first-stage shortlist based on the bidders' indicative proposals, followed by a second stage where bidders make their final binding offers after a comprehensive inside look at the genco, including its books.
Senoko's power assets comprise 1,945 MW of gas-fired combined cycle plants, 1,250 MW of oil-fired steam turbine plants and 105 MW of diesel-fired open cycle gas turbines. For the year ended March 2008, the company had revenues of $2.495 billion and earnings before interest, tax, depreciation and amortisation (Ebitda) of $245 million.
It is also the only genco - apart from Keppel Energy recently - which has Malaysian natural gas supplies. In May, Senoko renewed its earlier 15-year Malaysian deal - involving 150 million standard cubic feet of gas daily - for another 10 years, although the latest gas volume is not known.
Temasek's earlier schedule - outlined by Mr Wong at the sales launch of Tuas Power last October - was to complete the sale of all three gencos by the first half of 2009, 'barring no macro-shocks'.
Yesterday's Senoko sales launch came as a surprise as Temasek had kept its cards close to its chest all this while.
While the Tuas divestment was completed on schedule in five months, BT earlier reported that Temasek wanted to digest the implications of that transaction before embarking on the next sale.
Industry views were also mixed as to whether Temasek would continue with the sale of the two remaining gencos, or perhaps hold off for a while, given the grim economic outlook.
But as one observer noted: 'Temasek has indicated there is currently strong interest in Senoko, so it probably decided that it should go ahead at this point as no one knows how things will look down the road.'
He added: 'Besides, the investment company will not sell Senoko if the price is not right.'
Bloomberg cited Simon Powell, head of power research at CLSA Ltd in Hong Kong, as saying: 'Of course, there's the market downturn and rising fuel costs, but Temasek has got more traction going from the sale of Tuas.
'The price matters, but there were parties including banks that were eager for Tuas and lost out, and Senoko offers a chance to get into a stable cash flow business.'
BT understands that there are at least about half a dozen interested bidders for Senoko, including some who had lost out in the Tuas sale.
They include groups like Bahrain-based investment bank Arcapita and India's GMR Infrastructure - reportedly China Huaneng's closest rivals for Tuas - as well as Japan's Marubeni, India's Reliance Energy, the One Energy joint venture of Hong Kong's CLP Holdings and Japan's Mitsubishi Corp.
One confirmed local bidder is Sembcorp Industries, whose president and chief executive Tang Kin Fei earlier told BT that it would participate in the sale of the two remaining gencos as it wanted to secure at least one of them.
Because of the credit crunch, some groups had reportedly withdrawn from the Tuas Power bidding in the earlier stages, due to bankers pulling their financing commitments.
Temasek seeks bids for Senoko
Today Online 8 Jul 08;
TEMASEK Holdings is putting Singapore’s largest power generator up for sale, further opening the electricity sector to competition after selling Tuas Power — which it owned since 1995 — earlier this year.
The sale of Senoko Power will be completed by the end of next year, Temasek said in a statement.
Built at a cost of $2.6 billion, Senoko’s 3,300 megawatts of capacity supplied 30 per cent of Singapore’s electricity needs last year. The company earned $245 million before interest, taxes and depreciation on revenue of $2.49 billion for the year ended March 31 this year.
The sale of Senoko Power comes at a time when mergers and acquisitions have slumped as the collapse of the sub-prime mortgage market restricts banks from lending and curbs corporate purchases.
“Of course there’s the market downturn and rising fuel costs, but Temasek has got more traction going from the sale of Tuas,’’ said Mr Simon Powell, head of power research at CLSA in Hong Kong. “The price matters, but there were parties, including banks, that were eager for Tuas and lost out; Senoko offers a chance to get into a stable cash flow business.’’
Last month, Sembcorp Industries president Tang Kin Fei said his firm would bid, after losing out to China Huaneng Group in Temasek’s earlier tender for Tuas Power.
In March, Beijing-based China Huaneng agreed to pay $4.24 billion for Tuas, the smallest of Temasek’s three power generators.
Temasek last year revived an abandoned plan to sell the Singapore companies in order to tap rising demand for power assets. It has said it plans to sell Senoko Power and Power Seraya, transferred to Temasek from Singapore Power in 2001, by early next year. Bloomberg
Temasek launches Senoko Power sale
Straits Times 8 Jul 08;
SINGAPORE investment company Temasek Holdings yesterday launched the sale of the country's biggest power generating company, Senoko Power, in a deal that could raise about US$3 billion (S$4.08 billion).
Companies expected to bid include Sembcorp Industries, India's Tata Power, Japan's Marubeni, Bahrain investment bank Arcapita and Malaysia's Tanjong, said banking sources briefed on the deal.
Senoko, which supplies about 30 per cent of Singapore's electricity and has a generating capacity of 3,300MW, is the second of three power companies that Temasek hopes to sell by the middle of next year. It sold Tuas Power to China's Huaneng Group for $4.2 billion in March.
The Senoko sale comes as mergers and acquisitions slump, with the United States sub-prime debacle restricting banks from lending and curbing business takeovers.
'Of course, there's the market downturn and rising fuel costs, but Temasek has got more traction going from the sale of Tuas,' said CLSA analyst Simon Powell in Hong Kong. 'The price matters, but there were parties, including banks, that were eager for Tuas and lost out, and Senoko offers a chance to get into a stable cash-flow business.'
Senoko had revenues of $2.5 billion and pre-tax earnings of $245 million in the year ended March 31.
REUTERS, BLOOMBERG NEWS
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