Entergy sheds assets
US power generator Entergy is to sell its British and Australian power distribution assets as part of a move to focus on its core business. The announcement brings to an end the company`s aspirations of becoming a global player.
Assets to be sold include London Electricity and CitiPower. The company has also cut its dividend as part of its $4bn restructuring plans. The decision is in response to criticisms from shareholders that the company has under-performed recently. The sales could attract interest from other US utilities looking to expand overseas.
Entergy hopes to raise $4bn from the sales, 70 per cent of which will be used to reduce the company`s $10bn debt and revive its over-stretched balance sheet. The rest of the proceeds will probably be used for growth investments.
Entergy bought London Electricity for $2.1bn at the beginning of 1997, but the tough regulatory environment and the windfall tax have affected its investment return. The company bought Australian power distributor CitiPower for $1.2bn in 1996. Potential bidders for London Electricity could include utilities from the UK, USA and continental Europe. Japanese bidders may also show interest.