Clean energy company considers bids(5)

3i has reportedly offered £135m for 13% of Energy Developments’ assets following a 100% acquisition proposal by an Archer Capital-led private equity consortium early this month.

An “international infrastructure specialist fund manager” has offered £135 million ($220 million; €157 million) for the UK and French landfill gas (LFG) power generation assets of Australia-based Energy Developments.

London-listed private equity firm 3i is the unnamed fund manager, according to newspaper The Australian. If the offer is accepted, Energy Developments would receive approximately £75 million after the repayment of external net debt, which stands at around £56 million at the end of 2008, and other costs.

3i declined to comment.

Negotiations between Energy Developments and the fund manager are at “an advanced stage”, according to a statement from the company. Discussions with the same fund manager announced in July 2008 fell through this March due to “uncertainty over the timing and status of the requisite financing”. The current offer is supported by credit approved financing from banks, the company said.

Energy Developments:
bids received

The offer is for approximately 13 percent of Energy Developments’ worldwide installed power generation capacity of about 600 megawatts. This comprises the company’s UK LFG assets, a 50 percent stake in the Gastec Packington Joint Venture, which owns and operates a LFG project in the UK, and a 50 percent stake in Gastec Joint Venture, which owns and operates across 20 LFG projects in France. These assets netted EBITDA of about A$13 million ($10 million; €7 million) in the second half of 2008.

The offer values roughly 13 percent of the company’s energy assets at A$1 per share, the statement said. The company’s shares traded at around A$1.61 per share the day before the offer was made.
“This implies a substantial undervaluation of the company’s shares as the rest of the company is worth more than what the market has been paying. The strong offer effectively re-values the company,” said a source close to the matter.

Since the offer, Energy Developments’ shares have seen an upward trend and were trading at A$1.88 per share at time of press.

Earlier this month, Energy Developments received an incomplete proposal for a 100 percent acquisition of the company from a consortium of private equity firms led by Archer Capital, an Australian private equity firm. A committee of independent non-executive directors at Energy Developments “continues to evaluate” the proposal, the company said in a statement.