Synergy in secret South Freo agreement

Synergy has selected a buyer for the old South Fremantle Power Station, but won’t reveal who.

In June last year, Synergy announced it would run a rapid expression of interest process to redevelop the disused, 70-year-old power station in North Coogee after an unsolicited bid.

The process ran just eight days, with the government saying at the time that the successful party would be announced in September 2021.

Synergy has picked a preferred partner, but will not yet name the counterparty.

“Following the closure of the expression of interest process, Synergy has entered into a conditional agreement with a party with respect to the sale of the South Fremantle Power Station,” a spokesperson said today.

“At this stage of the sale process the details of the conditional agreement are commercial in confidence. 

“Synergy looks forward to working with this party going forward and sharing more on successful completion of the sale process.”

The state’s main electricity retailer also declined to say how many parties had applied through the expression of interest process, saying questions on the deal could not be answered because they were commercial in confidence.

By contrast, Energy Minister Bill Johnston last year tweeted a news article which said the process had received 12 applicants in 24 hours.

The government did not use a market-led proposal process for the site.

In that system, companies are named publicly during the process once they reach a certain stage.

Among market-led proposals, Georgiou Capital is working on a potential redevelopment of the Landgate building, Home Fire Creative Industries is behind the proposal for a new screen industry facility, and Harvis Capital is working on an intermodal terminal at Bullsbrook.

Similarly, the government often names preferred contractors for infrastructure building before the negotiations are finalised.

Shadow energy minister David Honey criticised the government’s approach.

“The proposed sale of the South Fremantle Power Station is another example of the lack of transparency under the McGowan government and Energy Minister Bill Johnston, and their exclusion of local community input or any real consultation with local governments,” Dr Honey said.

“We welcome sensitive redevelopment of this iconic building. 

“However, the secretive sale process reflects poorly on the Labor government.

“This is an important public asset and the whole community should have the opportunity to have a say on any proposals before they are finalised.”

Synergy also has low expectations for cash from the sale, according to its 2021 annual report published in September.

"The (South Fremantle) site has significant heritage value and was recently listed on the State Register of Heritage Places," the report said.

"The expression of interest process closes in July 2021, and subject to board approval, the group expects to announce the successful bidder in September 2021.

"The South Fremantle Power Station has a carrying value of nil at 30 June 2021."

For clarity, the accounting treatment is that assets held for sale are measured at the lower of their carrying value or fair value less cost to sell, according to the report.

Business News understands property developers Tattarang and Hesperia are not involved in the negotiations.

Kerry Stokes’s Australian Capital Equity did not respond to a request for comment.

In 2020, the state government picked Australian Capital Equity and Tattarang (formerly Minderoo Group) to redevelop the old power station in East Perth.

Hesperia has substantial heritage experience, including redeveloping the Old Treasury Buildings in the CBD.

Race is on

Meanwhile, the state government has declined to confirm short-listed bidders for the privatisation of the TAB.

It was reported this week that the TAB sale process, managed by Ad Astra Corporate Advisory, had progressed with Tabcorp and Entain on a short-list.

“For commercial and probity reasons, the state will not disclose the participants to the market process for the sale of the Western Australian TAB,” a state government spokesperson said.

“The next stage of the market process is the Request for Binding Offers stage, which is set to commence in the coming weeks.

“Should an appropriate arrangement be negotiated which is in the long-term interests of the industry and the State, a new wagering operator is expected to be in place towards the end of 2022.”