Singapore Power International, a unit of state-owned Singapore Power Ltd., has completed the purchase of GPU PowerNet, the Australian electric transmission subsidiary of GPU Inc., Morristown, NJ, for a total of about $2.2 billion (Aus.), GPU reported.
GPU and SPI reached a definitive agreement for the sale June 20. As a result of the sale, GPU expects to record an estimated after-tax loss in the second quarter of between $275-$300 million (US), which includes a $60 million (US) currency loss. These amount to a $2.27-$2.47/share loss, including a $0.50/share currency loss, GPU reported.
Singapore Power CEO Boey Tak Hap said earlier the company's entry into the Australian market will stand the company in good stead as it seeks to participate in other mature deregulating transmission and distribution markets. With the coming divestment of all local generation assets by April 2001, Singapore Power will have to look overseas for its future growth and expansion, he explained.
Singapore Power said it will fund the acquisition with a combination of nonrecourse debt provided by commercial banks and the capital markets and through equity provided by wholly owned subsidiary SP International.
GPU bought PowerNet in 1997 under the Victorian government's privatization process for $2.6 billion (Aus.), at a time companies were paying top dollar for privatized energy assets. PowerNet operates the electricity transmission network in Australia's state of Victoria. The high voltage grid services a 228,000 sq km area and transfers 44,000 gigawatt-hours /year of energy, Singapore Power said.
On May 24, GPU reported it had declined all bids that were submitted in connection with the intended sale of its two Australian subsidiary companies, GPU PowerNet and GPU GasNet. Following that announcement, there was renewed interest in the Australian companies and indications of improved pricing, it said.
Continued negotiations with SPI led to the June 20 agreement, GUP said. GPU reported it will use proceeds of the sale to reduce outstanding debt.
As part of its drive to focus on its core US power transmission business, GPU has said it plans to auction off its Australian natural gas transmission grid, GasNet, and gradually, most other overseas assets.
