Babcock & Brown Power has sold its interest in two Western Australian power stations for a total of $130 million.
Babcock & Brown Power has sold its interest in two Western Australian power stations for a total of $130 million.
The company today signed binding agreements to sell its stake in the 330 megawatt Neerabup power station and the 320MW NewGen Kwinana Station, which was officially opened earlier this month.
BBP has not disclosed who it has sold its interests to.
BBP said it will use the funds to repay a $118 million debt facility.
The announcement is pasted below:
Babcock & Brown Power (ASX:BBP) today announces that a major milestone has been reached with the BBPH1 $118 million debt facility to be fully repaid through asset sales and internally generated cashflows well ahead of schedule.
Len Gill, BBP Independent Chairman said, "The Board and management team continue to deliver on the plan to improve securityholder value outlined in August. The clearing of BBPH debt is an important achievement. We're pleased with the asset sale proceeds, realised in a difficult environment, reflecting the underlying value placed on quality power generation assets."
In relation to the strategic transaction underway, Mr Gill commented, "We are pleased with the level of interest in the strategic transaction, early indications have been encouraging. We expect to issue flyers this week and continue to work towards a sales process in 1Q CY09."
Asset sales
BBP has today signed binding agreements for the sale of its interests in each of the 320MW NewGen Kwinana Power Station ("Kwinana") and 330MW Neerabup Power Station ("Neerabup") for gross proceeds of $130 million.
The agreements, which are subject to several conditions precedent including pre-emptive rights granted in favour of entities related to ERM Power Pty Limited, are presently expected to be completed by the end of the calendar year.
On completion of the agreements, the BBPH $118 million facility will be fully repaid, approximately three months ahead of schedule, through approximately $86 million net proceeds from the Kwinana and Neerabup sales and $32 million from internally generated cashflows. The sale of Neerabup also results in cancellation of a $44 million Letter of Credit with Babcock & Brown (ASX:BNB).
BBP CEO Ross Rolfe commented, "We are pleased that the business continues to perform in line with expectations and that we have been able to use internally generated cashflows to contribute towards full repayment of the BBPH debt facility. In relation to the $2.7 billion BBPF2 facility we are pleased to advise that BBPF is compliant with all its banking covenants including the recent September 2008 quarter ICR covenant."
