In a little-noticed move, Japanese trading house Mitsui & Co has taken a strategic stake in a swag of power stations across Victoria and South Australia owned by heavily indebted power company GDF Suez.
The two companies are already closely affiliated, since Mitsui is a 30 per cent shareholder in Victoria's Loy Yang B power station along with holding a 21 per cent stake in the Kwinana power station in Western Australia, along with GDF Suez.
In the latest deal, Mitsui has taken a 28 per cent stake in GDF Suez's local arm, International Power (Australia) Holdings, which operates a portfolio of 2604 megawatts. The price has not been disclosed, but it is expected to have been several hundred million.
International Power owns Canunda, a 46-MW wind farm in South Australia, Hazelwood, a 1675-MW coal-fired power station in Victoria, Pelican Point, a 487-MW gas-fired power station in South Australia, Synergen which has a 396-MW gas-fired peaking plant in South Australia along with retailer Simply Energy, with some 350,000 electricity and gas accounts.
"This new partnership ... will contribute to the group's 2013-14 portfolio-optimisation program and will lead to a reduction in the group's net debt upon completion of the transaction," GDF Suez said recently.
GDF Suez, 36.7 per cent owned by the French government, completed the purchase of all of the capital of UK-based International Power last year, leaving it with an estimated €34 billion in debt. Since the acquisition, it has been selling selected assets as it seeks to cut borrowings.
The deal between the two came as Mitsui was negotiating to buy a one-fifth stake in the Astoria gas-fired power station in New York, a $US1 billion 575-megawatt asset, which has just been concluded.
The high level of group debt is believed to have forced GDF Suez out of the bidding for power assets being sold in NSW by the state government.
Earlier this year, Commonwealth Bank sold its 8.16 per cent share in Hazelwood. The brown-coal fired station provides about a quarter of Victoria's power.