Monday 11th April 2011
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Genesis Energy is taking a $103 million writedown on the price of the Tekapo stations its government owner is making it buy.
On April 1, the shareholding ministers issued proposed directions under the Electricity Industry Act requiring Genesis Energy and Meridian Energy to transfer the Tekapo Stations and associated infrastructure from Meridian Energy to Genesis Energy for $821 million.
In an investment statement for a bond sale to fund the purchase the board of state-owned Genesis said it supported the acquisition at the acquisition price.
But Genesis considered that the cost of future remedial work required for stations was greater than the cost taken into account in determining the $821 million purchase price.
To comply with accounting rules the company would take a charge of $103 million against the acquisition cost of the Tekapo Stations.
"This means that the accounting fair value of the Tekapo stations on acquisition is approximately $103 million lower than the purchase price for those assets," the statement said.
The after-tax reduction in shareholders' equity is $74 million.
The board said the purchase provided access to long life assets that were not easily replicated in the New Zealand market and provided Genesis Energy with a more balanced and diversified generation portfolio.
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