Wednesday 17 January 2018

Planned sale of Bord Gais stalls over lack of bids

The Government's reserve price of €1bn may have put off some buyers

Issue: Plan to break up Bord Gais Energy caused problems
Issue: Plan to break up Bord Gais Energy caused problems

Roisin burke and Nick Webb

The planned €1.4bn sale of semi-state Bord Gais Energy is close to stalling, according to financial and industry sources.

Last week it emerged that giant private equity group Blackstone had been approached by Bord Gais advisers and asked to re-enter the bidding. Blackstone had earlier exited the sales process.

Now sole active bidder Viridian is struggling to get clarity that the sale process is still actually in play, according to one well-informed source.

Blackstone was a hotly tipped likely solo bidder following sale memorandum stage, but it's not known whether it showed the colour of its money with an offer. If it did, it was knocked out at an early stage.

Canadian renewables group Brookfield is also believed to have been approached to make a bid, having formerly partnered with Centrica, which is now out of the running.

A comment by Minister for Public Expenditure Brendan Howlin earlier this week said that assets like Bord Gais would only be sold "if we get fair value", a comment that is thought to have further fuelled worries about the process at Viridian, which is owned by Bahraini investment group Ardcapita.

Viridian is the sole confirmed active bidder for Bord Gais at this point.

The planned sale was hit by a series of reverses in recent weeks, with the withdrawal of Malaysian energy firm Tenaga Nacional from the auction process. British giant Centrica also saw its interest cool, with suggestions that it wasn't prepared to bid more than €1bn – the Government's reserve price.

"In deals like this, when something happens it can take six to nine months to start it up again," according to one source.

Sources have indicated that plans to break up the unionised Bord Gais Energy had caused serious issues.

A consortium led by Viridian, had been planning to break up the retail arm with its 900,000 customers, a renewable energy generation business and the Northern Irish business.

The sale of Bord Gais Energy is the central part of the Government's agreement with the Troika to sell off up to €3bn in State assets. This agreement has been watered down considerably since the Troika arrived in December 2010.

Suggestions that the ESB could be sold or broken up were ruled out very early in proceedings. A proposed sale of Coillte or a deal to sell off harvesting rights for the semi-state forests has also been kyboshed. Last week it emerged that the Government was no longer looking to offload its 25 per cent stake in Aer Lingus – at least until markets improved. Global stock markets hit record highs last week.

The €405m sale of the National Lottery licence to Camelot in October is the only successful exit by the Government from its vast roster of state and semi-state companies.

The €1bn plus cheque from the sale of Bord Gais was earmarked to fund a major jobs and stimulus programme. This was agreed following a heated battle between Mr Howlin and the Troika.

Last week, however, in what appears to be something of a volte face, Howlin was quoted as saying that there was no obligation under the Troika bailout programme to sell Bord Gais Energy.

The Department of Energy didn't comment before time of going to press.

Sunday Independent

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