Bord na Mona eyes stake in plant

Bord na Mona is negotiating to take a 20 per cent stake in the new £100 million (€127 million) state-of-the-art electricity generating plant which Finnish consortium Fortum (formerly IVO) is building at Edenderry, Co Offaly. It expects to conclude a deal within 12 months but declined to disclose how much it will pay.

Meanwhile, the company announced record profits of £8.2 million (€10.41 million) yesterday, up from £5 million last year, representing the best performance in its history. The company's results were boosted by an £8 million Government cash injection, to help clean up its balance sheet. The £8 million was the final tranche of a £108 million Exchequer equity investment.

Bord na Mona managing director, Mr Paddy Hughes said the company had done all the research and feasibility studies for the new power station and had already made it clear it expected to be compensated for this. He said the price it paid for its 20 per cent stake would reflect this.

Bord na Mona will supply the new station with one million tonnes of peat a year for 15 years. Before the power station was put out to tender, Bord na Mona was told by the then Department of Transport, Energy and Communications that it could not compete for the building and operation of the station. Mr Hughes said he had got agreement to seek the 20 per cent stake from the Departments of Finance and Public Enterprise. He could not disclose a price because the company had not yet done due diligence.

Mr Hughes said Bord na Mona was now in a very strong position to make good returns from its businesses. He said the company may take in partners either on a individual Bord na Mona subsidiary level, or at a group level.

He said he would favour taking in a partner at the group level, but stressed the company was not currently talking to potential investors.

All four of the company's divisions - horticulture, environmental, fuels and peat energy - were profitable for the first time said Bord na Mona chairman Mr Pat Dineen.

"We are convinced that profits can be increased," he added.

Mr Hughes said the company's environmental division, which currently employs 90 people, had performed exceptionally well and has huge growth potential. He said the company would continue to reduce its dependency on milled peat for revenue.

The latest results were achieved despite two poor summers, according to Mr Hughes. Last year the company only harvested 65 per cent of its target, but in the year to date it had achieved 90 per cent of its production target, compared to just 30 per cent at the same time last year.

Mr Hughes said the company's acquisitions - Sutton's (for which it paid £5.2 million last year) and Staffords, two fuel distribution companies - had added about £1 million profit to the company's bottom line.

He said the company recognised that domestic users were moving away from solid fuels and it was restructuring to adjust for this. The company aimed to recoup its investments in acquisitions within three to four years.

Bord na Mona said its turnover was up 13 per cent to £153 million, despite a drop of £10.6 million in income from supplying the ESB with peat to fuel its stations. Reducing milled peat supply prices was conditional on the Exchequer injecting money to help the company deal with its crippling debt burden which reached £200 million at one time. It is now £50 million.