AGL Rejects Alinta Tilt For Liddell Power Station
Get More Commentary, Discussion & Market Information On -
AGL has rejected Chinese-owned Alinta’s $250 million offer to buy the Liddell coal-fired power station in NSW and will proceed with its announced plan to shut down the station in 2022.
AGL said in a statement to the ASX yesterday morning that the offer was not in the best interests of either the company or its shareholders. “The offer significantly undervalues future cash flows to AGL of operating Liddell power station until 2022 and the repurposing of the site thereafter,” AGL said in A statement to the ASX before trading started.
"On 30 April 2018, AGL Energy Limited received an unsolicited, non-binding, highly conditional indicative offer from Chow Tai Fook Enterprises and Alinta Energy Pty Limited to acquire the Liddell Power Station, associated assets and the related site for a cash consideration payable to AGL of $250 million (the Offer).
"AGL has completed a thorough assessment of the Offer and, after careful consideration, has advised Chow Tai Fook and Alinta that it will not proceed any further with the Offer. The AGL Board has determined that the Offer is not in the best interests of AGL or its shareholders.
"The Offer significantly undervalues future cash flows to AGL of operating the Liddell Power Station until 2022 and the repurposing of the site thereafter.
“In considering the Offer, AGL sought external expert advice on matters relevant to the Offer, including the capital expenditure requirements across all plant components and the reliability and safety profile of the ageing power station.
"Consequently, AGL has reaffirmed its decision to close Liddell in December 2022 and will continue progressing its NSW Generation Plan, which includes repurposing Liddell. The Australian Energy Market Operator has confirmed that completion of this Plan will address the capacity shortfall that may occur as a result of Liddell’s closure,” AGL said.
Alinta made its bid for the ageing Hunter Valley power station in April, describing it as a “compelling commercial proposition for AGL shareholders”. But analysts alway regarded it as a cheap try on and nothing more.
The Turnbull government has been lobbing for AGL to accept the deal to keep the station open beyond its slated 2022 closure and to keep downward pressure on power prices.
Prime Minister Turnbull wants Liddell to stay open until 2025, when Snowy Hyrdo 2.0 is online, to ensure there is no gap in power availability.
AGL CEO Andy Vesey has previously said the board had not been swayed by criticism from the prime minister and senior coalition figures because the decision to close the ageing power plant was based on a rigorous process.
Yesterday’s announcement supports that view. Investors agreed, sending the share sup 1% to 421.52 in a market that was easier for the session.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.