ferret's stock to watch: pacific hydro ltd

  1. 4,756 Posts.
    Ferret's Stock to Watch: PACIFIC HYDRO LIMITED
    09:03, Friday, 24 December 2004


    Sydney - Friday - December 24: (RWE)


    Pacific Hydro has been on the speculative counter this week on
    rumours that offshore interests might grab a piece of the company for its
    unique energy investments.

    On Tuesday the company tried to dampen down speculation by
    releasing the following statement to the Australian Stock Exchange.

    "Pacific Hydro Limited is aware of speculation in the media
    relating to its Strategic Review Process and a possible $800 million

    "PHY is in a position to confirm that a large number of companies
    have become involved in the Expression of Interest stage of the process.

    "However, reports of any bids are purely speculative as the
    Strategic Review is at an early stage and has not progressed to a point
    where any party has expressed a view, or been invited by PHY to express a
    view, on value, the statement declared.

    According to the Australian Financial Review there are about 15
    prospects sniffing around although the front runners are reportedly the
    UK's International Power, Japan's Kansai Electric Power, Hongkong
    Electric and China Light and Power.

    One of the most powerful attractions is the company's carbon
    credits which are worth millions of dollars.

    Pacific Hydro Limited is Australia's leading renewable energy
    company, producing non-polluting electricity from wind and water.

    With extensive new wind farm and hydroelectric developments
    planned in Australia and internationally, the company will continue to
    provide strong returns for the environment, local communities, and


    Shares of Pacific Hydro rose 4c to $4.04 yesterday. Rolling high
    for the year has been $4.10 and low $2.60. Dividend is 5 cents a share to
    yield 1.24 per cent. The board declared an unfranked dividend of 2.5
    cents for the second half, bringing the total dividend for the 2003/04
    financial year to 5 cents. The second half dividend has already been

    Chairman Mr Bernard Wheelahan said that in the 2003/04 financial
    year the company achieved a net profit after tax of $31.2 million, an
    increase of 10 per cent on the previous period.

    "I feel this is particularly impressive given the level of
    uncertainty surrounding the Federal Government's position on Mandatory
    renewable energy target (MRET) which persisted for most of the year.

    "We made very strong progress in our schedule of international
    expansion, with the purchase of the Coya and Pangal hydro assets in Chile
    and further progress in the development of La Highuera and La Confluencia
    hydro projects also in Chile.

    "We expected further strong returns from our assets in the
    Philippines with the commencement of construction of the Bakun hydro
    supplemental project, Mr Wheelahan said.

    It is clear that if the Federal Government ratifies the Kyoto
    protocol Pacific Hydro would gain significantly by allowing it into the
    carbon credit club on the basis of clear development projects with
    countries already in the Kyoto agreement.

    Carbon credits are currently worth 8 to 10 euros tonne per tonne
    of carbon and Pacific estimates it could collect 650,000 tonnes.

    Strategic update

    Managing director Jeffrey Harding reported on his strategic
    update late October.

    He says a number of events have since taken place.

    "We are focussed on growing Pacific Hydro and maximising the
    value of your shareholding.

    "Pacific Hydro will benefit from both international and domestic
    events and initiatives – befitting a company that holds assets overseas
    and within Australia.

    "The most welcome recent development has been Russia's decision
    to ratify the Kyoto Protocol, bringing the agreement into force for 36
    industrialised countries, including Australia's major trading partners,"
    Harding, believes.

    Australia is not a member.

    "An important announcement was made recently to the Australian
    Stock Exchange, announcing a strategic review of the company and the
    appointment of corporate advisors, Carnegie Wylie & Company and

    This review was prompted by the independent director's
    determination to maximise the value of the company for all shareholders
    following a number of unsolicited approaches from companies interested in
    forging closer links with Pacific Hydro.

    "The purpose of the review is to establish a defined process for
    the independent directors to carefully assess any firm approaches and
    proposals from other companies with a view to maximising long term value
    for shareholders.

    "Pacific Hydro is looking forward to another period of expansion
    of its hydro and wind generation capacity in Australia and overseas,
    which would dramatically increase our existing generation capacity.


    Since floating on the Australian Stock Exchange in 1993, Pacific
    Hydro has built an impressive portfolio of hydro and wind farm projects
    in Australia and internationally.

    Consistent with Pacific Hydro's policy of not building dams all
    hydro projects have utilised either existing irrigation dams or
    run-of-water flows.

    In 1997, the company embarked on its first international
    development signing a joint venture agreement with Aboitiz Equity
    Ventures for a 70MW hydro project on the Bakun River in the Philippines.

    The $US150 million development remains the largest infrastructure
    project ever built in the Philippines by an Australian company.

    In 2001, Pacific Hydro diversified into wind energy, the world's
    fastest growing energy source, with completion of the Codrington Wind
    Farm in southwest Victoria.

    The company has more than 2,000MW of wind projects at various
    stages of development including the Challicum Hills Wind Farm and
    Portland Wind Project.

    Pacific Hydro has projects slated for development across
    Australia, the Philippines and Chile to continue delivering considerable
    benefits to investors, the environment and local communities.


    Copyright © 2004 RWE Australian Business News. All rights reserved.


    I don't hold PHY
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