ERM POWER BUYS MAJOR STAKE IN OAKEY POWER STATION
6 June 2011,
INTEGRATED energy company ERM Power Limited (ASX:EPW) has executed agreements to purchase an additional 50 per cent interest in Oakey Power Station from Redbank Energy Ltd in a deal worth $61.7 million.
The acquisition will take ERM Power’s interest in the Oakey Power Station from 12.5 per cent to 62.5 per cent.
Oakey is a two unit peaking power station with dual fuel capability located 150 kilometers west of Brisbane in a high demand growth region and in close proximity to fuel supplies, gas and electricity transmission infrastructure.
ERM Power will utilise existing cash and has put in place a $15.6 million corporate debt facility to fund the acquisition.
Managing director and CEO Philip St Baker (pictured) says the acquisition provides immediate value for shareholders and will provide capacity and energy into the National Electricity Market.
“The purchase price is less than 50 per cent of the estimated replacement cost and the asset is in near new condition due to the fact that it is a peaking power station that has operated less than five per cent of the time over its 11 years of operation,” he says.
“Ultimately, the asset is a peaking power station and is built to operate only in extreme peak electricity load demand times, such as when we have a heat wave in Queensland during summer.
“In addition to these obvious benefits, ERM Power has the skills, experience and complementary businesses to exploit substantial upside from this asset over the short, medium and long term.”
St Baker told Brisbane Business News the asset will be highly valuable to the company both financially and strategically.
“It will not only boost our earnings and profits, but also provide for full vertical integration of our business in Queensland in the future,” he says.
EPW shares remain steady today at $1.58