Genesis part-sale in 'next month or so' confirmed

The Government has confirmed its plans to sell down its holding in Genesis Energy ''in the next month or so'' with more details coming tomorrow, Prime Minister John Key says.

Speaking at his weekly post-Cabinet press conference, Mr Key confirmed the Government's intention to sell 49% of Genesis, saying the details would come in Finance Minister Bill English's speech to the Auckland Chamber of Commerce tomorrow.

The Genesis part-sale is expected to raise between $700 million and $1 billion.

Milford Asset Management analyst William Curtayne said Genesis represented a different investment opportunity from Mighty River Power and Meridian Energy and should not be written off.

The generation assets of Genesis included the coal- and gas-fired Huntly thermal power station, hydro-electricity schemes in Tekapo, Tongariro and Waikaremoana, a small wind farm in South Wairarapa and a 31% stake in the Kupe gas field off the coast of Taranaki.

Genesis also had the largest customer base of the listed generation-retailers (gentailers).

''The key difference between Genesis and the other two IPOs is its exposure to thermal energy. Meridian is largely a hydro generator with a small exposure to wind while Mighty River is a mix of hydro and geothermal generation.

"The thermal exposure allows Genesis to manage changes in prices and demand in a different nature to the other two newly listed gentailers.''

Last week Genesis reported a 23% fall in first-half earnings to $150.5 million, reflecting stiff retail competition and a warm winter, which meant hydro storage was above average and wholesale prices were lower.

Mr Curtayne said signs suggested Genesis was well prepared and was already acting like a listed company.

Management announced at its recent half-year result the company had undertaken a reprofiling of its coal contracts and signalled the maintenance work on its Tekapo canal was near completion.

Additionally, debt taken on to fund the acquisition of the Tekapo hydro scheme had been paid down to a sustainable level.

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