Meridian sells out of Australian wind farm

Last updated 05:00 01/07/2013

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Meridian Energy has sold its stake in the recently completed Macarthur wind farm to a Malaysian corporation, saying the low interest rate environment made other wind projects in Australia more appealing.

The soon-to-be-listed electricity company held a 50 per cent stake in the generation site with AGL Energy, and that has now been sold to Malakoff Corporation Berhad.

The 420-megawatt 140-turbine project, which is the biggest wind farm in the southern hemisphere, generates enough electricity to power 220,000 homes.

The sale confirms earlier speculation that Meridian was considering exiting the 25-year AGL partnership, which had been circulating the energy market at the beginning of the year.

"While the Macarthur investment was intended to be held over the full project term, the low investment rate environment and the opportunity to invest in further wind farms in Australia provided a compelling reason to look at a sale and the reinvestment of funds in future renewable generation options in Australia," said chief executive Mark Binns.

The exact price of the deal was not disclosed, but the project has an enterprise value of A$659 million (NZ$778m). Independent reports last week claimed the Malaysian power producer paid A$130m ($153m) for Meridian's stake.

Previous reports have stated that Meridian received a fixed bond-like return from its Macarthur investment, which would be unappealing with global central banks activity keeping interest rates at historical lows.

Binns said the Macarthur investment delivered a return that "reflects our early stage involvement in development, and our investment in construction plus capitalised interest, holding costs and other expenses".

Meridian said it would continue to push ahead with construction of its Mt Mercer wind farm, a 131MW 64-turbine project located in Western Victoria, and will operate the facility once it is complete.

The company also operates the Mt Millar wind farm in South Australia.

The Wellington-headquartered company, which operates a 100 per cent renewable energy generation portfolio, is expected to be partially floated on the NZX later this year.

It is the biggest electricity producer in New Zealand, generating about 88 per cent of its power from hydro dams and the remainder from wind.

The firm is valued at $5.25 billion.

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