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THE WALL STREET JOURNAL/DOW JONES NEWSWIRES: Shell-Bechtel To Sell Pwr JV Intergen; 10 Plants Included: “The package includes plants in the U.K. the Netherlands, Mexico, Australia, China and the Philippines, sources told Dow Jones Newswires. (ShellNews.net)

 

DOW JONES NEWSWIRES

Posted 12 Oct 04

 

LONDON -- Royal Dutch/Shell Group (RD, SC) and Bechtel Group Inc. (BTL.XX) have put their electricity joint venture InterGen up for sale, but only half of its 20 power plants are included in the package, sources familiar with the offer said.

 

The U.S.-based company owns 16,200-megawatts worth of power plants worldwide, but only 7,844 MW are for sale in the first tranche.

 

The package includes plants in the U.K. the Netherlands, Mexico, Australia, China and the Philippines, sources told Dow Jones Newswires.

 

A banker familiar with the sale estimated the 10 plants are worth around GBP4 billion, including roughly GBP3 billion in debt.

 

The three U.K. plants - Spalding, Rock Savage and Coryton - have drawn "tremendous interest" another banker involved in the sale said, as has the 800-MW Dutch plant Rijnmond.

 

"It is important that (the U.K. and Dutch) plants were included in the package because they are so very valuable," the banker said, citing their location, long-term contracts and new construction.

 

He said there is little generation for sale in the U.K. and the auction of three plants, with roughly 2-gigawatts of generating capacity, could revive activity in the U.K.'s mergers and acquisitions market.

 

The Chinese plant, Meizhou Wan, is less coveted, he added, and has been touted for sale for around a year.

 

The portfolio of power plants, most of which have long-term sales contracts, is likely to attract interest from private equity players in the U.S. and U.K. due to the steady source of income.

 

U.S. company AES Corp. (AES) and financial players such as General Electric Co. (GE), American International Group (AIG) and Australia's Macquarie Bank (MBL.AU) are likely bidders.

 

Though a date for first-round bids hasn't yet been set, a banker estimated bids are likely due in mid-November.

 

A Shell spokesman said: "Given improved power markets...Shell and Bechtel have decided to investigate the sale of Intergen," adding it wasn't certain the pair would conclude a deal.

 

Separately, InterGen's 650-MW Sidi Krir plant in Egypt is in the process of being sold.

 

The clutch of remaining plants in InterGen's portfolio include far less attractive assets such as plants in the U.S. that sell their power into the riskier spot market.

 

Also, plants in Turkey are financed in part by the Overseas Private Investment Corp. of the U.S. and this means a U.S. company must always own at least a quarter of the plant, deterring non-U.S. investors.

 

-By Nina Sovich, Dow Jones Newswires; +44 (0)207-842-9353; nina.sovich@dowjones.com


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