mac gen could be back on

There has been movement at long last on the $1.5 billion Macquarie Generation stalemate, with AGL Energy set to decide whether to take the competition regulator to court in pursuit of NSW’s largest power generation company. It is understood AGL has told NSW Treasurer Mike Baird it will progress the stalemate this week, with most factors pointing to a legal challenge to the Australian Competition and Consumer Commission’s ruling.While Baird has anointed AGL as the preferred bidder for MacGen, AGL has been feeling some pressure as underbidder ERM Power refuses to give up hope. As reported by Street Talk on the Financial Review Sunday program, ERM has not given up hope of snatching MacGen and has been looking for a way to bump its offer closer to AGL’s $1.505 billion mark.AGL has exclusive rights to talk with the NSW government, but there is nothing stopping ERM from lobbing an unsolicited offer. If ERM could get to $1.5 billion, it would be tempting for Baird to take the cash and forgo uncertainty around AGL’s bid.ERM has had a month to rethink its offer and knows AGL would be getting a fair deal at $1.5 billion. It likes MacGen’s Bayswater and Liddell power stations, which are the two lowest-cost generators in the state.ERM’s problem remains funding. It has investment bank UBS at hand and lined up a combination of debt and equity for its initial bid. It would need a hefty equity raising to bid higher and hedge funds are watching closely.Baird has consistently said he would prefer to hold on to MacGen rather than sell below its retention value, believed to be close to $1.5 billion.Also on Baird’s plate this week is the state’s sub-$100 million portfolio of renewable energy plants, Green State Power. Baird is expecting final offers on Monday, with parties able to bid for parts or all of the wind and hydro portfolio. Infigen Energy is believed to be among those kicking tyres on the assets, along with Chinese buyers.Green State was set up in June to operate the assets, which were previously held by Eraring Energy (now owned by Origin Energy). Assets include the Hume, Burrinjuck and Keepit hydro generators, the Blayney wind farm, and Green State’s interest in the Crookwell wind farm. The generators had a combined output of 105 megawatts.