Meridian to buy Trustpower's Australian hydro assets for A$168 million

Friday 22nd December 2017

Meridian Energy has agreed to buy Trustpower's Australian hydro-electric generation assets for A$168 million, which it says will support an expanding retail business across the Tasman.

Wellington-based Meridian will buy the shares of GSP Energy in Australia, subject to Foreign Investment Review Board approval, adding three power stations generating 92.4 megawatts to its portfolio in Australia, it said in a statement. The former Green State Power hydro assets are the Hume, Burrinjuck and Keepit power stations in New South Wales.

"Meridian is building our portfolio of complementary Australian renewable generation to support our growing retail business," chief executive Neal Barclay said. "Customers are finding value in our easy-to-use online model that shows them how much power they are using and what it costs and we’re finding there is a strong and growing desire from Australian electricity consumers to support a ‘green’ energy retailer."

Tauranga-based Trustpower started reviewing its ownership of the Australian assets in August, hiring Forsyth Barr to run the process, which it today said culminated in the sale. Infratil-controlled Trustpower said it will reap a "significant gain" on the A$72.2 million price it paid in 2014.

"We came to the view that while the assets in GSP Energy were generating solid cash flows, they were no longer a strategic fit for Trustpower without a broader Australian platform," chief executive Vince Hawksworth said. "Realising value by selling GSP Energy, including a material gain on our purchase price in 2014, is an excellent outcome for Trustpower."

Trustpower spun out its wind and solar generation facilities into separately listed Tilt Renewables in October 2016 and since then has focused its strategy on the New Zealand business.

Meridian already has wind-farms in Australia and more than 100,000 customers on its Powershop branded retail business but has been dealing with an uncertain policy environment. Still, at the company's annual meeting in October, former chief Mark Binns said it had just signed parameters for the final negotiation of power purchase agreements with several developers, potentially underwriting solar and wind projects in NSW and Victoria.

Australia has been a happy hunting ground for New Zealand's biggest electricity generator, with Meridian booking a $600 million profit 12 years ago when it sold its then-Australian subsidiary Southern Hydro for A$1.42 billion.

Meridian shares last traded at $2.94 and have gained 15 percent this year, while Trustpower stock closed at $5.95 yesterday having gained 26 percent this year.

(BusinessDesk)

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