loy yang

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    Malaysian duo seeks way round Loy Yang buy ban
    April 17 2003
    By Rod Myer





    Malaysian investors Sime Darby and Genting Bhd are believed to be looking for a suitable way to formally re-enter the bidding for the financially stressed Loy Yang A power station.

    The two companies were involved in the sale process for some months but withdrew two months ago, apparently under pressure from the Malaysian Government. The Government, a stakeholder in Genting, is unhappy with the US-British-Australian action against Iraq and is loath to invest in Australia as a result.

    However, it seems the two companies are looking to distance Malaysia from any buy-in by setting up an offshore investment vehicle that would actually mount a bid. Such a move would get around the Mahathir Government's concerns.

    A month ago the only consortium left in the Loy Yang sale process was made up of Australian Gas Light, Commonwealth Bank and Tokyo Electric.

    But along with the return of the Malaysians, Origin Energy has begun expressing interest in the power station. Origin this week did some preliminary work in the Loy Yang data room set up by merchant bank ABN Amro; such action is generally seen as a forerunner to making a bid.



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    However, Loy Yang does not seem to be a good fit with Origin. The company is a vertically integrated energy provider owning gas and electricity distribution and retailing, gas wells and some small gas-fired electricity generators. Although it is in generation, its exposures have been small, its plants falling into the "peaking capacity" category.

    Were it to buy Loy Yang, a 2000-megawatt base-load provider, it would be greatly increasing its exposure and getting into a sector of the market it has shown no interest in up to now. Some observers feel Origin may be playing a spoiler role, trying to push up the price of the asset for competitor AGL, while being ready - should the price be at fire-sale levels - to buy itself.
 
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