reason for sell down???, page-2

It could be related to the article below. I wonder if PHY is interested in Southern Hydro?

malfunction

I hold PHY


Australia Power Bids May Reach $4.1 Billion in February as U.S. Firms Exit
By Tansy Harcourt and Angela Macdonald-Smith


Melbourne, Feb. 4 (Bloomberg) -- Xcel Energy Inc. and other U.S. utilities may receive bids for as much as A$7 billion ($4.1 billion) of Australian power assets this month, hastening their retreat from foreign markets in the wake of Enron Corp.'s failure.

Xcel's NRG Energy Inc., CMS Energy Corp. and Aquila Inc. are among U.S. utilities reversing more than a decade of expansion into Australia and the Asia-Pacific. Asian companies such as Genting Bhd. and Sime Darby Bhd., and domestic operators including Australian Gas Light Co. may fill the gap, bankers said.

``A lot of the U.S.-based utilities are facing trading or financing difficulties and they need to shore up their balance sheets, so they're looking to all their global investments to see what they can sell,'' said Laurie Conheady, an associate director of infrastructure credit ratings at Standard & Poor's. That's created a buyer's market for some ``very, very good assets.''

The pull back by U.S. companies follows the November 2001 collapse of the then No. 1 energy trader Enron, in a scandal over inflated revenue figures. That prompted regulators to probe energy trades, rating companies to downgrade power-company debt, investors to dump their stock and lenders to tighten credit.

NRG, CMS and Australia's Horizon Energy Investment Group Ltd. own Loy Yang Power, Australia's largest privately owned electricity company. Bankers said they may see bids for Loy Yang -- valued at as much as A$4 billion including debt -- this month. That may also be when Aquila unwinds Australian holdings valued about A$3 billion.

Spokesmen for the energy companies either declined or were unavailable to comment.

Wash Trades

Dearborn, Michigan-based CMS sold or announced the sale of $3.6 billion of assets last year, part of a plan to trim $7.1 billion in debt and improve its credit rating. Moody's Investors Service and Standard & Poor's rate CMS's debt below investment grade, increasing the company's cost of borrowing.

CMS halted energy trading after disclosing last May $5.2 billion in so-called wash transactions -- buying power or natural gas from one party and selling it back at the same price. Such trades falsely inflated revenue.

Aquila also quit wholesale energy trading last year.

CMS's shares lost almost 70 percent of their value in 2002 and have fallen 40 percent this year.

Minneapolis, Minnesota-based Xcel has been negotiating with creditors of NRG, CMS's U.S. partner in Loy Yang, on terms for a voluntary bankruptcy of the unit after it defaulted on some of its $7 billion debt.

Loy Yang

Loy Yang, which operates a 2,000-megawatt power plant near Melbourne, has A$3.4 billion of debt, built up after Victoria state government sold its biggest power utility for A$4.8 billion in 1997. A A$500 million payment is due in May.

In September, Horizon wrote down the value of its 25 percent stake in Loy Yang, excluding debt, by a sixth to A$150.1 million.

Companies overpaid by about 30 percent for electricity assets sold by Victoria, said McLennan Magasanik Associates consultant Ross Gawler.

``U.S. companies had lots of spare cash at the time,'' Gawler said. ``The Australian market was seen as a great emerging opportunity.''

Bids for Loy Yang may come as early as this month.

Malaysia's Genting and Sime Darby last month said they were interested. A rival group may comprise Australian Gas, the nation's biggest energy retailer, and Tokyo Electric Power Co., Japan's largest utility, bankers said. J.P. Morgan Chase & Co. is advising the group, they said.

Back to Kansas

Australian Gas spokeswoman Jane Counsel declined to comment. Tokyo Electric spokesman Hiroshi Itagaki said no decision had been made.

Salomon Smith Barney Inc. is advising the Malaysian group, NRG hired ABN Amro Holding NV, Morgan Stanley is advising CMS and Horizon is working with Macquarie Bank Ltd., the bankers said. Spokesmen at the banks declined to comment.

Alcoa Inc. had earlier been interested in the assets.

Next month may also see the unwinding and sale of Australian assets owned by Kansas City, Missouri-based Aquila.

AlintaGas Ltd., the dominant gas utility in Western Australia state, said it may buy Aquila's 34 percent of United Energy Ltd., a power distributor in Victoria. Aquila holds its stake in United through Power Partnership Pty., jointly owned with AMP Henderson Global Investors.

Aquila and United together own 45 percent of AlintaGas. The U.S. power company would also sell its direct stake in AlintaGas, the bankers said.

Macquarie Equities Ltd. analyst Ed Reekie values United at A$2.64 a share. Aquila is seeking as much as A$3 a share, implying a valuation of A$1.85 billion, Macquarie said.

AlintaGas spokesman David Franklyn wouldn't comment on the details of the restructuring.

Also on sale is Madison, Wisconsin-based Alliant Energy Corp.'s Southern Hydro, a 500 MW capacity hydroelectric generator sold by Victoria in 1997 for A$391 million. Final bids are due next month. Southern Hydro declined to comment.

Australian Gas and closest rival Origin Energy Ltd. may be interested as they seek to better balance retail requirements with generating capacity. Last year, Australian Gas bought retailer Pulse Energy Pty., while Origin bought the retail unit of CitiPower, as well as the Powercor retail business the previous year.

Origin declined to comment.