28 November 2002 – US owned Alliant Energy (Australia) says it will put up for sale its Victorian based renewable peaking generator Southern Hydro following the decision by its parent to exit it’s Australian business.
Alliant owns Southern Hydro and various holding companies which no longer fit into the group’s strategy of concentrating on regulated assets.
“Southern Hydro was the largely unappreciated gem of the Victorian generation privatisation program and has proven its unique attributes by growing increasingly profitable ever since,” Alliant Energy (Australia) managing director Simon Maher said. “Every time that a sale of a part interest in Southern Hydro has occurred it has been for an increased price.”
Maher said Alliant Energy was disappointed to be departing from such a precious business but was unable to provide capital for the many growth projects and business initiatives that Southern Hydro had developed.
“Such additional value can best be delivered by a new equity player able to build on the considerable foundations already laid,” Mr Maher said.
Alliant Energy aims to reach final settlement by 31 March 2003. An information memorandum will be prepared before Christmas. Southern Hydro has 10 power stations in Victoria, with an aggregate capacity of 500 MW or six per cent of Victoria’s total capacity.
As part of its ongoing and previously stated effort to narrow the number of business platforms and focus on core, utility-related businesses, Alliant Energy announced its commitment to pursue the sale of, or other exit strategies for, a number of non-regulated businesses over the next 12 months.
These businesses include Alliant Energy’s Whiting (oil and gas), Australian businesses, affordable housing and several other non-core businesses which have an aggregate book capitalization, including debt, of approximately $900m.
Alliant Energy anticipates a reduction of approximately $800m to $1bn in debt currently outstanding as a result of these transactions.
“This portfolio of businesses has been profitable and represents assets from which we are confident we can harvest value in 2003,” said Davis. “While we expect each of these businesses will deliver positive earnings in 2002, they are either not in line with our core business strategy and/or produce significant earnings volatility.”
“These are necessary decisions as we seek to focus on a narrower core of utility-related businesses and manage through our near-term financial challenges,” Davis said. “In aggregate, we believe we can exit these businesses at a gain in 2003. We will also continue to evaluate the potential sales of other non-strategic assets in our continuing quest to narrow our existing strategic platforms.”