Small change

Key Points:

By early April 2004, the contracts will have been signed to transfer the ownership of Loy Yang A power station in Victoria, a critical piece of the State's electricity generation infrastructure, to the Great Energy Alliance (GEAC). GEAC is a consortium of AGL, Tokyo Electric Power and a range of investors.

With financial closing to follow in the ensuing few days, this will be the culmination of many months work, to effect not only the acquisition, but also a restructure of the station's debt assumed when the station was initially acquired, by NRG Energy, CMS Energy, and others, from the Victorian government in 1997. Depressed electricity pool prices had made the station unviable with the investment structure in place following the original acquisition.

The restructure is one of the largest debt restructurings ever undertaken in Australia, and certainly the largest project finance restructuring. It has involved many and varied issues for lenders, including the ACCC proceedings regarding the competition issues posed by GEAC taking control of such a significant piece of electricity generation infrastructure. The restructuring also for a time became involved in the Chapter 11 bankruptcy proceedings in the US involving NRG Energy, Inc. NRG Energy, Inc, successfully came out of those proceedings in early December 2003.

It will be a great relief to investors and debt providers, and the public generally, to see the ownership of Loy Yang A again in stable hands.

Clayton Utz acts for the senior secured CPI linked bondholders in Loy Yang A, represented by ANZ as bond agent, in respect of the restructure.