Yahoo!/DOW JONES NEWSWIRES: Shell-Bechtel's InterGen Sale Gets 6 Bids So Far-Sources: “Over the course of this year, Shell was forced to report that it had overestimated its proven oil reserves by 20%. The company is selling non-core assets like InterGen in order to focus on exploration and production to increase its base of proven reserves.” (ShellNews.net) 10 Dec 04
By Nina Sovich
Of DOW JONES NEWSWIRES
Friday December 10, 2:45 PM
LONDON (Dow Jones)--At least six groups of investors have placed bids for the entire portfolio of power plants being sold by InterGen, sources involved in the deal said.
InterGen's portfolio was put up for sale by joint-venture partners Royal Dutch/Shell Group (RD, SC) and Bechtel Group Inc. (BTL.XX) in October. The move is part of a broad effort by Shell to raise up to $12 billion by 2006, mostly via asset sales.
Over the course of this year, Shell was forced to report that it had overestimated its proven oil reserves by 20%. The company is selling non-core assets like InterGen in order to focus on exploration and production to increase its base of proven reserves.
The InterGen portfolio, consisting of 10 existing power plants and two plants under development, is worth roughly GBP3 billion.
Sources say the bidders include: Japan's Mitsubishi Corp. (8058.TO); Teachers' Private Capital, the private equity arm of Ontario Teachers' Pension Plan (OTP.YY) and American International Group (AIG); Tanjong PLC (2267.KU) of Malaysia; Reliance Energy (500390.BY) of India; and International Power (IPR) teamed with Japanese trading house Mitsui & Co. Ltd. (8031.TO); and YTL Corp (4677.KU) of Malaysia. Spokespeople from Mitsubishi, Reliance Energy and Teachers' Private Capital and International Power declined to comment. Spokespeople from YTL and Tanjong couldn't be reached. Shell also declined to comment on the bidders.
First-round bids were received by Citigroup (C), InterGen's advisor, on Nov. 29. The investment bank is looking to sell the company in one package. Nevertheless, several investors only made offersfor part of the portfolio, a source said.
One banker following the deal expressed surprise that relatively few North American or European investors have bid on the package.
He pointed out that many of the 7,844-megawatt portfolio's most valuable assets are in Europe, including three power plants in the U.K. and the one in the Netherlands.
The European plants account for 40% of the portfolio's electricity output. The Rijnmond plant, which is brand new and located in the power-hungry Netherlands, is deemed especially valuable.
The remaining plants are in Mexico, Australia, China and the Philippines.
However, it seems that European players who might have been interested in the European plants, are put off by owning power plants in Asia.
Centrica PLC (CNA.LN) for example, is also one of the most aggressive buyers of power plants in the U.K. but is known to be extremely reluctant to buy power plants where it has no customer base.
Asian bidders are also elbowing out Europeans with the intensity of their interest in buying power plants.
Edison International (EIX) is in the process of selling an even larger portfolio of power plants scattered throughout Europe, Asia and Australia.
Though International Power and Mitsui are set to close on Edison's power plants, the auction also drew interest from Malaysian casino and power group Genting (3182.KU) and Mitsubishi.
Company Web site: http://www.intergen.com
http://sg.biz.yahoo.com/041209/15/3p5ez.html