| Fri 24 Oct 2008, 15:20 | | IPS - IPSA Group Plc - Possible disposal of Gas Turbines |
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IPS
IPSA
IPS - IPSA Group Plc - Possible disposal of Gas Turbines
IPSA GROUP PLC
(Incorporated and registered in England and Wales)
(Registration Number 5496202)
AIM Share Code IPSA ISIN GB00BOCJ3F01
JSE Share Code IPS ISIN GB00BOCJ3F01
("IPSA" or "the company")
POSSIBLE DISPOSAL OF GAS TURBINES
Highlights
* Advanced discussions for sale of four gas turbines: significant potential
profit
* Option to acquire new turbines for Coega development under negotiation
IPSA Group PLC ("IPSA" or "the Company") announces that it is in advanced
discussions for the sale of the four Fiat Avio 501 D gas turbines previously
intended for its Coega project near Port Elizabeth, South Africa.
Having been approached by a number of potential buyers, IPSA is now in various
stages of advanced negotiations with selected parties outside South Africa for
the sale of the turbines at a price in excess of $100 million (GBP62 million).
This compares with an all-in acquisition cost of approximately $60 million
(GBP37 million). However, the Company wishes to emphasize that any such sale
may not proceed to completion. Shareholders will be updated shortly on
progress.
The turbines have hitherto been earmarked for the Coega project. In recent
weeks, IPSA has been awaiting the outcome of certain constitutional changes
affecting the Coega Development Corporation ("CDC"). These changes are
considered necessary to enable CDC to grant leasehold rights for a new
independent power plant to serve the baseload power and steam needs of
industrial customers on the Coega site. No firm timetable has yet been
established for bringing an independent combined cycle gas turbine ("CCGT")
plant on line at Coega.
It is therefore apparent that the in-service date for the first 521 MW of open
cycle gas turbine capacity, originally targeted for mid-2009, will not now be
achieved. IPSA is, therefore, considering taking advantage of the strong
worldwide demand for gas turbines by endeavouring to sell the four fully-
refurbished Fiat Avio 501 D turbines acquired by the Company in March 2007 for
the Coega Project.
In order to minimize the impact of selling the turbines on the earliest possible
timing for the Coega Project, IPSA is negotiating an option to acquire new
turbines with identical specifications, to be delivered on site at Coega
directly from the manufacturer to meet the new in-service dates imposed by the
delayed timetable resulting from the necessary constitutional changes at CDC.
The Board of IPSA anticipates that new gas turbines to be acquired pursuant to
any such option would cost approximately Euro128 million (GBP102 million) the
cost of which will be reflected in the electricity tariff over the life of the
plant. Further announcements on the option arrangement will be made in due
course.
The overall plan for IPSA to develop, construct and own 1,600 MW of CCGT
capacity at Coega remains unchanged. Furthermore, IPSA remains committed to
developing new power capacity in southern Africa. On 9 September 2008 the
Company announced that it has increased its planned coal-fired power plant
capacity to be developed based on Elitheni coal in the Eastern Cape from 500 MW
of mine mouth capacity to some 1,000 MW of capacity spread over a number of
sites between Indwe, Port Elizabeth and East London. IPSA already owns and
operates the first independent gas-fired cogeneration plant in South Africa,
operating at Newcastle, KwaZulu Natal.
For further information contact:
Peter Earl, CEO, IPSA Group PLC: +44 (0)20 7793 5615
Elizabeth Shaw, COO, IPSA Group PLC: +44 (0)20 7793 5615
Nick Naylor / Jamie Boyd, Noble & Company Ltd: +44 (0)20 7763 2200
(Nominated Adviser and Joint Broker) Sean Lunn,
Hichens, Harrison (South Africa) Ltd: +27 21 950 2711
(Joint Broker)
Allan Piper, Tavistock Communications (UK PR Advisers): +44 (0)20 7920 3150
Dino Theodorou PSG Capital (Pty.) Limited +27 11 797 8400
(South African Sponsors)
Sugitha Naidoo, College Hill (South African PR Advisers)+27 11 447 3030
Or visit IPSA`s website: www.ipsagroup.co.uk
Date: 24/10/2008 15:20:11 Produced by the JSE SENS Department.
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