ERM BUYS POWER STATION, PAYS OFF DEBT

Written on the 19 November 2013

ERM BUYS POWER STATION, PAYS OFF DEBT

ERM Power (ASX:EPW) has bought the Oakey Power Station outright and paid off its debt in the process by raising $74.7 million through a share placement.

The cost of buying the remaining 16.67 share in the power station was $31.5 million and the rest of the capital will be used to pay EPW’s outstanding $40.9 million debt.

EPW issued 29.5 million new ordinary shares at a price of $2.53 per unit, a discount of 9.8% to the previous 10 business day average, to institutional and sophisticated investors.

Managing Director and CEO Philip St Baker believes the successful capital raising proves there is strong investor support for EPW’s strategy to become the fourth pillar in the Australian electricity market.

EPW shares are trading 5.9 per cent down at $2.550 per unit today, but still above the price offered through the capital raising.

The company forecasts an underlying net profit after tax in the year to June 30, 2014 of between $2 million and $26 million – a $2 million upgrade on previous figures as a result of the acquisition.

“On an annualised basis the transactions will deliver a $28 million increase in free cash flow for the group, including a positive tax effect of $6 million. The acquisition also accesses an additional $20 million in franking credits,” says St Baker.

“Oakey is a high quality, well located asset with an estimated replacement cost above $300 million. ERM Power looks forward to leveraging this asset to further accelerate its growth in the Australian electricity market.”

The placement was jointly underwritten by UBS AG Australia Branch, CIMB Capital Markets (Australia) Limited, Morgans Corporate Limited and Petra Capital Pty Limited.


Latest News

BUSINESS CONFIDENCE AT A SIX-YEAR HIGH

SMALL and medium businesses have entered 2017 with their confidence at a six-year high, building on strong gains m...

CRITICS CALL FOR MORE INDEPENDENT DIRECTORS ON BLUE SKY BOARD

BLUE Sky Alternative Investments (ASX: BLA) has defended its governance and valuation processes in response to severa...

BEGA PAYS $460 MILLION FOR VEGEMITE TO BRING THE ICONIC BRAND BACK UNDER AUSTRALIAN OWNERSHIP

VEGEMITE is back under Australian ownership after Bega Cheese (ASX: BGA) agreed to buy Mondelez International's A...

GUVERA ESCAPES WIND-UP ORDER

GUVERA has avoided being wound up after a claim for a $1.78 million debt by Kwong Properties was dismissed at the ...

Related News

BUSINESS CONFIDENCE AT A SIX-YEAR HIGH

SMALL and medium businesses have entered 2017 with their confidence at a six-year high, building on strong gains m...

CONSUMERS PESSIMISTIC ENTERING 2017

CONSUMER confidence remains at its weakest point since April 2016, according to the latest Westpac Melbourne Institut...

RISE OF STARTUP SUPPORT PROGRAMS NOT AS ROSY AT IT SEEMS

ENTREPRENEURIAL cultivation companies in Australia are appearing quickly, but questions have been raised about whe...

SMES TAKE RETAIL MARKET SHARE AS CONSUMERS CHOOSE PERSONALISATION

IN a battle for the hearts and wallets of Australian consumers, it appears that small and medium retail businesses...

Contact us

Email News Update Sign Up Contact Details
Subscriptions

PO Box 2087
Brisbane QLD 4001

LoginTell a FriendSign Up to Newsletter