2 Jul 2012
TrustPower has conditional contracts in place with Siemens for the turbine supply and Origin Energy for the long term sale of electricity and renewable energy credits. All other contractual arrangements and approvals necessary to achieve financial close have been completed or are expected to be completed by 31 July 2012. TrustPower believes that Snowtown Stage 2 will be a low cost investment and project economics are very attractive based on the conditional contracts secured but to ensure that the turbine price offered under the Engineer Procure and Construct Contract is maintained, it is necessary for financial close to occur by 31 July 2012. The total expected cost for the project excluding capitalised interest is expected to be no greater than A$465 million.
As has been advised, TrustPower has been running a targeted selection process to identify a co-investor to acquire Snowtown South prior to construction commencing. While there has been significant interest shown by potential investors given the necessity to commit to the project by 31 July 2012, TrustPower has determined to proceed to financial close by 31 July 2012 and delay introducing a co-investor into the project until after financial close has been achieved.
TrustPower remains committed to introducing a co-investor following financial close and is comfortable to hold the entire Stage 2 development through the construction phase.
TrustPower has received committed offers of financing that are on terms capable of acceptance from its relationship banks to construct the whole of Snowtown Stage 2. While the additional gearing required to complete construction will move forecast Group gearing towards the higher end of the Group’s target gearing range by 2014, it is expected that the Group will operate comfortably within bank financial covenants through this period. Group gearing will be reduced by the eventual sale of Snowtown South.
Further information on the details of Snowtown Stage 2 will be provided once financial close has been completed and all key approvals have been obtained.
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