Mountside Properties has entered the bidding process for Gama's €96 million stake in the Tynagh Energy plant in Co Galway. Emmet Oliver reports.
The company, which already owns 20 per cent of the plant, has informed London-based solicitors Freshfields that it will not be selling its shares and wants to acquire some part of the Gama stake.
Gama is selling at least half of its stake but claims it might consider selling its entire 80 per cent holding if the price is right.
It is understood Mountside, as an existing shareholder, has pre-emption rights, which means the sellers have to give the company the opportunity to match any bid that comes from an outside bidder.
Five bidders have submitted indicative bids to Freshfields over recent weeks. It is understood the front runners from this group are General Electric, Babcock and Brown and Australian infrastructure company Macquarie. Japanese company Mitsubishi is not believed to be among the leading bidders at this point.
There have been major changes in the consortium which won the contract to build a new power station for the State three years ago. South African bank Investec sold its shares to Gama and beef processor Martin Blake sold his stake in Mountside Properties.
The main shareholder is now Bran Keogh, a former consultant with the Irish Productivity Centre and a former colleague of Mr Blake. He is now director of Tynagh Energy Ltd. While Gama acquired the shares held by Investec Bank, it has maintained all along a desire to reduce its holding.
What is not clear at this stage is how much of the Gama stake Mountside could afford to purchase. Bank finance is currently being arranged. It is possible that Mountside might purchase another 20 per cent of Tynagh to double it current stake. This would cost about €24 million.
The company recently suffered a setback when Cork County Council turned down a planning application it made for a new plant.
Whatever changes do take place in the shareholding of the Tynagh plant must be approved by the Commission for Energy Regulation (CER).
The gas-fired plant, which is able to produce more than 400 megawatts of power, is expected to come into commercial operation by mid-February. The plant is attractive to major international investors because the output is to be sold at a guaranteed price for the next 10 years to the ESB.
The Republic is also suffering a shortage of supply of electricity which is likely to continue for several years. Viridian, the second largest player in the electricity market, plans to build a second plant in Huntstown, north Co Dublin.
The recent breakdown of the ESB Coolkeeragh plant in Co Derry has also tightened the supply of power north and south of the border. The North-South interconnector has been heavily utilised to balance out supply and demand in the two jurisdictions.
