International Power (IP) has agreed on the sale of its 33.3% equity stake in the 420MW T-Power CCGT plant in Belgium to Itochu, a leading Japanese Consortium. The company will receive € 48m for its stake.
The Belgian/French utility had to sell its stake to satisfy demands of the European Commission, which saw this as part of the clearance requirements for the reverse take-over of IP by GDF Suez.
T-Power is a Belgian CCGT-project that will be fully operational during 2011 and is built via a consortium consisting of Tessenderlo Chemie (33%), (92,62 EUR, 0,18%) (33%) and International Power (33%). When operational the plant will be able to cover ~2.5% of Belgian electricity demand. T-Power -which was budgeted at € 448m- already signed a 15-year tolling agreement (with five-year extension option) with Essent Trading International (subsidiary of Essent NV, now RWE). International Power was selected as the operatorof the facility.
We already pointed to this potential transaction on 26 January 2011 and saw a lot of logic in the deal since: i/ Electrabel would have taken control over the operation of T-Power while Tessenderlo Chemie tried to become independent from Electrabel; ii/ the Belgian Competition Council acknowledged the concerns made by other Belgian electricity generators/suppliers re Electrabel’s already dominant position (>70% of supply, ~85% of production) in the Belgian market. The acquisitionwould have strengthened their position in production, wholesale & trading, balancing and ancillary services; iii/ also Essent Belgium (RWE) feared that Electrabel would gain too much information about its strategy on the Belgian market.
Note that International Power (IP) bought Advanced Power’s 33% stake in the project for € 23m and is now booking a profit. We made a rough calculation and expected GDF Suez could receive ~€ 55m for its 33% stake. The number came in slightly lower, at € 48m or € 0.35m/MW.
This deal was already pre-announced and won’t materially impact GDF Suez’ numbers. We continue to rate GDF Suez Accumulate. Our TP of € 30/sh is based on a mix between a DCF and SoTP valuation.