By Nick Stride
Friday 26th October 2001 |
Text too small? |
Contact is the subject of a $3.85 a share takeover offer from 51% owner Edison Mission Energy. Contact's submission argued that, for new generation to be economic, it was likely electricity prices would have to be higher than $50 a megawatt hour.
ABN's research, which also drew on comments this week from state-owned generator Genesis Power, showed hedge contracts were now being struck at $50-$65 a MWh. If the long- run marginal cost of electricity (LRMC) was $55, Contact shares would be valued at $6.30. The minimum value of the shares, based on $48 a MWh, was $4.91.
"The consensus view of the electricity market has changed materially since Grant Samuel wrote its first (May) independent valuation report valuing the company at $3.10. Sure proof of this has been provided in the (Electricity) Market Surveillance Committee's report and in Contact's own assessment of the LRMC at $50-plus a MWh," the research report said.
Genesis Power chief financial officer Steve Rudd said this week that the new power station the company was building would be in the $50 to $55 a MWh LRMC range.
"We believe Edison Mission Energy is well aware the market has been 'anchored' in the perception of the past and has astutely launched a takeover bid exploiting this inefficiency in the market," ABN's report said. "Unfortunately for EME, the soaring electricity prices this winter exposed Contact's awesome pricing power for all to see."
No comments yet
PaySauce Quarterly Market Update - June 2024
Manawa Energy - Annual Meeting and Director Nominations
SKO - Annual Shareholders Meeting Materials
VGL - 2024 Half Year Results Announcement Date
TruScreen Group Limited ("TRU") - Late Annual Report
ARB - Sale of In Vitro Business
NZK - Change of External Auditor
SCT - Scott lands major contracts for MHL in Europe
July 2nd Morning Report
PFI - Details of FP24 Results Webcast