'New Era' under way as Bord Gais Energy finally put on market
STATE-owned Bord Gais Energy has been formally put up for sale, becoming the first state asset to be auctioned off under the 'New Era' privatisation scheme.
The sell-off is expected to raise between €1bn and €1.5bn, and a deal could take up to a year to close.
Half of the cash will be used to pay off a share of the national debt and half is earmarked for job creation schemes.
Potential buyers were told to contact executives at Royal Bank of Canada (RBC) Capital Markets, who have been hired to handle the sale on behalf of state-owned Bord Gais.
The announcement that the sale process has been launched was made in a notice to the Irish Stock Exchange. Law firms McCann Fitzgerald and Allen & Ovary are also advising Bord Gais on the sale.
Bord Gais Energy is made up of electricity generating assets including wind farms and the Whitegate power station in Cork, as well as the retail arm of the business that sells gas and electricity to 900,000 customers.
The business being sold includes Firmus Energy, a gas distribution and supply business in Northern Ireland and an energy trading unit.
Bord Gais Energy plans to increase its earnings before interest, tax, depreciation and amortisation (ebitda) to €150m in the next five years, the company said in a statement.
Many investors use ebitda as a basis for determining how much they will pay for a business.
Bord Gais Networks, which owns the country's gas distribution infrastructure, is not for sale.
The launch of the sale comes just days after former NTR boss Michael McNicholas was named as the new chief executive of Bord Gais, though he will only take up the role in June when the sale process is expected to be well advanced.
The sale of Bord Gais Energy is expected to be followed by sales of some ESB power stations, much of the state forestry agency Coillte, and the government shareholding in Aer Lingus. All of the disposals are being handled by the New Era agency, on behalf of the Government.
The hope is to raise around €3bn from the privatisation programme.
New Era has hired A&L Goodbody and Barclays Capital to advise it on the Bord Gais Energy sale.
The new Bord Gais chief executive succeeds John Mullins, who left the company last year after his contract expired.
The launch of the Bord Gais sale will increase pressure on the Government to firm up plans for spending its share of proceeds.
The European Commission has said that the Government has not yet indentified the projects where this anticipated €750m will be invested.
A decision on which ESB power stations will be sold also still needs to be made.