Mirant has put its caribbean operations up for sale as well as that in the Philippines. Above is the Jamaica Public Service Company's headquarters on Knutsford Boulevard, New Kingston. - Ricardo Makyn/Staff Photographer
While Atlanta-based electricity pro-ducer Mirant Corp. seeks purchasers for its Jamaican assets, the company has also started seeking bids for its multibillion-dollar power plants in the Philippines, according to wire reports.
Mirant has sent out a short sale document on the asset to potential bidders, including some Japanese firms and financial investors, the sources, who asked not to be identified, told Reuters.
Mirant is selling its ownership interest in three generating facilities in the Philippines - in Sual, Pagbilao and Ilijan - that account for 2,203MW in generating capacity.
Banking sources say the Philippine asset, estimated by some to have an enterprise value of nearly US$3 billion, is likely to generate strong investor interest because of the lucrative long-term power purchase agreements it holds.
The independent power producer is expected to conduct the auction in two stages, asking interested parties to submit indicative bids by the end of August, with binding bids due by the end of this year, said one source.
"Plenty of people have expressed interest. There is sufficient demand. People have been waiting for this for a long time," the source said.
Credit Suisse, Mirant's financial adviser on the sale, declined to comment.
Sale of assets
Mirant, which emerged from bankruptcy in January, said last month it would auction its Philippine and Caribbean businesses and expected the transactions to close by mid-2007.
It also plans to buy back up to US$1.25 billion of its shares as it seeks to raise its stock price after dropping an unsolicited bid to buy rival NRG Energy Inc.
A sale of Mirant's plants in the southeast Asian nation - which accounts for nearly half of Mirant's overall cash flow - would be the last major auction of power assets by a U.S. utility in the region.
The asset's long-term sale contracts could provide stable revenue sought by financial investors and by some Japanese trading houses that have been ramping up investments recently in the cyclical natural resources industry.
But some Western investors may decide the economic and political risks in the Philippines are too high, banking sources said.
Regional power investors such as OneEnergy Ltd. — a venture of CLP Holdings Ltd. and Mitsubishi Corp. — International Power Plc, Mitsui, and Marubeni (8002.T) might be interested, some sources have told Reuters.
They also said financial investors such as American International Group could be interested as well.
The sources told Reuters that Mirant was expected to release a memorandum with substantial details of the Philippine asset to interested parties by early August.
Investors who make it to the second round will be provided with full data before the deadline for final bids, they said.
Kept in the dark
But while the Philippines have been given some information as well as a time frame for the divestment, its Caribbean customers have been kept in the dark about their own prospects.
Mirant acquired a majority stake in the Jamaica Public Service Company five years ago when it paid the Government US$183 million for 80 per cent of the company and announced plans to spend approximately US$500 million over a decade to modernise and expand its electricity generating capacity.
The Jamaican Government's own plans to divest its remaining 20 per cent stake in the company have had to be shelved, pending a decision by Mirant about its plans.
