CEPA quits
\nTanjung Jati
\npower project<\/p>\n
HONG KONG (Reuter): Southern Co Inc's Consolidated Electric
\nPower Asia Ltd (CEPA) decided to quit the Tanjung Jati power
\nstation project in Indonesia because of uncertainty over the
\ncontract terms, CEPA said on Wednesday.<\/p>\n
Southern Co and Hopewell Holdings Ltd said earlier that
\nHopewell, CEPA's former parent, would sell its remaining 20
\npercent stake in CEPA in return for CEPA's 80 percent interest in
\nthe central Java power project and US$150 million in cash.<\/p>\n
"We were feeling a little queasiness about the project," CEPA
\nmanaging director Raymond Hill told Reuters in an interview.<\/p>\n
The company was about to make a major payment under the
\ncontract, and while bank financing was in place, little progress
\nhad been made on concluding certain contract terms, Hill said.<\/p>\n
In particular, CEPA and its Indonesian partner PT Perusahaan
\nListrik Negara (PLN), the Indonesian state-owned electricity
\ncorporation, had failed to confirm the electricity tariff that
\nthe power plant would charge, said Hill.<\/p>\n
Hopewell, through its minority shareholding in CEPA, had a
\nmuch lower exposure to the uncertainties of the deal and was
\nprepared to continue, Hill said. "There was a clear difference of
\nviews between the two shareholders," he said. "The solution is
\nbasically as you see it."<\/p>\n
New York-listed Southern Co Inc, through subsidiary Southern
\nElectric International Inc, bought about 40 percent of CEPA from
\nHopewell in January 1997 and acquired another 40 percent in a
\ngeneral offer at HK$18.50 per share.<\/p>\n
The latest deal was also valued at about HK$18.50 per CEPA
\nshare, and analysts said Hopewell got a good price, above the
\npower producer's estimated net asset value.<\/p>\n
"I think it is a good price. He (Hopewell chairman Gordon Wu)
\nsold the shares at a premium to CEPA's NAV," said analyst Terry
\nYip at BZW Securities Asia. "So there should be no regrets from
\nHopewell."<\/p>\n
Southern's CEPA is also happy with the price and the end of
\nuncertainties.<\/p>\n
"We are buying income producing assets with it," said Hill.
\n"This is healthy for Southern's overall financial position. It
\nreduces the risk and advances the cash we get out of it."<\/p>\n
CEPA's contribution to Southern, currently estimated to be
\nless than five percent of net income in 1997, will begin to take
\noff in 2000 when CEPA's Sual project in the Philippines comes on
\nline, said Hill.<\/p>\n
CEPA's strategy will continue to be widely focused in Asia in
\nthe coming years.<\/p>\n
The company is aiming to increase its investment in the
\nPhilippines, revitalize Southern's connections in China, chiefly
\na power plant project in partnership with Huaneng International
\nPower Co and continue to pursue CEPA negotiations in Pakistan,
\nIndia and Bangladesh.<\/p>\n
"My biggest management problem is that I have more interesting
\nprojects than I have manpower to send to handle them," said Hill.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/cepa-quits-1447899208",
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