Babcock & Brown Power has sold its Tamar power project at a loss, as its corporate refinancing launches into syndication. It sold Tamar, a half-built 210MW combined-cycle gas-fired power station, for A$100 million ($90 million) to the government of Tasmania. BBP will record a loss of A$42 million on the sale, and will continue working on the project until the Australian Competition Commission approves the sale, though it would be repaid for this expenditure.
ANZ, BNP, CBA, Dexia, nabCapital, Natixis, SG, Unicredit and WestLB have launched BBP's A$2.7 billion generation company refinancing to market. The mandated lead arrangers agreed to the deal on 6 June, and now have to contend with further bad news for BBP and its manager, Babcock & Brown, including a A$452 million impairment charge at BBP related to its acquisition of Alinta Power.
The financing breaks down into a A$960 million five-year loan, a A$1.6 billion three-year loan, a one-year $60 million working capital loan and an A$80 million
letter of credit. The debt will be priced according to BBP's rating, which would need to be investment grade to avoid sharp increases and cash sweeps.
The Tasmanian government says that it will fund the acquisition through its Infrastructure Fund, with state-owned retailer Aurora borrowing a further A$240 million to complete the plant. While the government has encountered criticism for buying back a plant that it only tendered out in 2007, Tasmania says that it will be able to reprivatise the plant in three to five years.
