YTL Power shortlisted to buy Senoko

HONG KONG: Singapore government-owned investment firm Temasek Holdings Pte Ltd has shortlisted around five companies from preliminary bidding for its sale of Senoko Power Ltd, banking sources said.

France's GDF Suez, Japan's Marubeni Corp, India's Tata Power Co Ltd, YTL Power Bhd, and the OneEnergy Ltd tie-up between Hong Kong's CLP Holdings and Japan's Mitsubishi Corp are the shortlisted bidders, bankers told Reuters Basis Point, in a deal that market players have said could fetch about US$3 billion (RM10 billion).

Other firms that were understood to have submitted last week non-binding expressions of interest included Bahrain investment bank Arcapita Inc, Singapore's Keppel Corp and Sembcorp Industries Ltd.

The shortlisted candidates will be allowed to conduct due diligence around next month.

The Senoko sale, the second of three generating company divestments that Temasek plans by the middle of next year, has sparked huge interest in the loan market, with more than 10 banks earlier talking to would-be bidders about debt financing to back the acquisition.

With an electricity generating capacity of 3,300 megawatts, Senoko is larger than the 2,670MW Tuas Power that was sold to China's Huaneng Group for S$4.2 billion (RM10 billion) in March.

In the financial year ended March 31 2008, Senoko had revenue of S$2.5 billion (RM6 billion) and earnings before interest, tax, depreciation and amortisation of S$245 million (RM586 million).

As previously reported, sources have said that Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Calyon, DBS Bank, DZ Bank, Fortis Bank, Mizuho Corporate Bank, Natixis, OCBC Bank, Sumitomo Mitsui Banking Corp and WestLB have been in discussions with multiple bidders about providing funds on a non-exclusive basis.

Market participants have estimated that the sale of Senoko, which generates about 30 per cent of Singapore's electricity, could fetch around US$3 billion and that the winning bidder could need debt financing of up to US$2 billion (RM6.5 billion)-equivalent to back its offer.

Pricing is expected to be from 100 basis points to 150 basis points, and will ultimately depend on Senoko's debt multiples and enterprise value as well as the sponsor's financial strength.

The financing's structure is expected to include a bridging loan followed by a non-recourse takeout facility - similar to Huaneng Power International's facility to back its S$4.2 billion acquisition of the Tuas Power Ltd genco, the first of Temasek's power divestments, earlier this year.

Huaneng in March got a S$2.25 billion (RM5.4 billion) 18-month bridge arranged by BNP, Calyon, DBS, Fortis, OCBC and SMBC via Sinosing Power Pte Ltd.

Credit Suisse and Morgan Stanley are advising Temasek on all three genco sales. (Reuters)