CLP acquires controlling interest in a portfolio of power assets in Asia-Pacific region

Dec. 7, 2000à‚–CLP Holdings today announced that CLP Power International (CLP-PI), its wholly-owned subsidiary, has acquired controlling stakes in power generating assets in India and Australia from Powergen UK Plc. and other companies.

The total value of the acquisition is equivalent to US$ 594 million (HK$ 4,633 million), which includes amounts to Powergen and other shareholders, and new equity for re-financing.

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Following the signing today, CLP-PI and Powergen will establish joint venture companies owned 80% by CLP-PI and 20% by Powergen. Through this joint venture structure, CLP-PI will effectively own controlling stakes in two quality power stations operating in Australia and India – a 74% interest in a 1,450 MW coal-fired power station and its associated brown coal mine in Yallourn, Victoria, Australia, and a 70 % interest in GPEC, a 655 MW gas and naphtha fired combined cycle power station located in Gujarat, western India.

This acquisition will significantly increase the equity investment of CLP-PI from 1,047 MW to 2,575 MW of generating capacity, thus establishing its position as one of the leading private sector power companies in the region.

As part of the deal CLP-PI has the rights to acquire Powergen’s development rights in several power projects in India and Thailand with total equity of approximately 2,000 MW, subject to various consents. The associated consideration will be payable subject to board approval and financial close of individual projects. The JV may also acquire Powergen’s interest in PT Jawa Power within the next five years subject to a number of conditions.

Andrew Brandler, Group Managing Director of CLP Holdings, said: “This acquisition reflects the exciting opportunities we see in the regional electricity market and is an important step in the CLP Group growth strategy to expand in the region.”

Kenneth W. Oberg, Managing Director of CLP-PI, said: “CLP-PI aims to become the leading regional private sector power company, committed to long-term development in the Asia-Pacific Region. This acquisition substantially strengthens CLP-PI’s position in its target markets and demonstrates our commitment and strengths in the regional power market.”

Ed Wallis, Powergen’s Chairman said: “This is an excellent deal for both companies… It fits with our strategy of refocusing our business on the UK and US markets. This deal provides an excellent outcome to our decision to dispose of our assets in Australia, India and elsewhere in Asia because CLP-PI’s strategic focus is on these regions of the world. Their involvement will facilitate access to the investment capital the assets need to realise their full potential.”

Yallourn Energy, a merchant plant and captive coal mine, is the second lowest cost power producer in Victoria and contributes to 22% of Victoria’s electricity output. GPEC is a modern combined cycle plant that commenced commercial operation in 1998 and is located in one of the more prosperous states of India. Both assets have strong management teams and good operating records.

Powergen’s continued involvement in the assets through the joint venture structures will facilitate transition and handling of issues specific to the individual assets.

The acquisition is subject to certain approvals from relevant authorities and other parties in the target markets.

CLP-PI currently has 1,047 MW of equity investment in power plants with a combined installed capacity of some 4,500 MW in Taiwan, Thailand and Malaysia.

CLP Holdings, the parent company of CLP-PI, is one of the largest investor-owned power companies in Asia with a vertically integrated power utility subsidiary operating an installed capacity of 8,250 MW in Hong Kong. Through other wholly owned subsidiaries, it also has equity investment or exclusive usage rights in about 2,000 MW of generating capacity in the Chinese Mainland and multi-utility undertakings in Hong Kong.

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