ScottishPower sells Australian-based Powercor

Scottishpower, the UK's biggest electricity group, was yesterday finalising the estimated A$2.4bn (£940m) sale of Powercor, its Australian subsidiary, to a consortium backed by the Hong Kong-based entrepreneur Li Ka-shing.

Scottishpower, the UK's biggest electricity group, was yesterday finalising the estimated A$2.4bn (£940m) sale of Powercor, its Australian subsidiary, to a consortium backed by the Hong Kong-based entrepreneur Li Ka-shing.

Sources close to the deal said Mr Li's Cheung Kong Infrastructure Holdings and Hongkong Electric Holdings will pay A$1.2bn in cash, assume A$632m of debt and repay A$595m to bondholders to take control of Victoria state's largest power distributor.

The deal is also thought to include ScottishPower's 19.9 per cent stake in the Hazlewood power plant, also in Victoria, which is 72 per cent controlled by National Power.

Powercor was sold in 1995 as part of the Victoria state government's privatisation programme. It was bought for A$2.15bn by Pacificorp, the US company which was subsequently acquired by ScottishPower for $10.7bn (£7.13bn).

Angelos Anastasiou, an analyst at Williams de Broe, said: "I think the reason they [Scottish] have been keen to get out is that if you are concentrating on developing your business in the UK and the US, do you really need a small offshoot in Australia as well?" Adam Forsyth, of Robert Fleming, said: "I think A$2.4bn is a reasonable price. It's a small premium on what Pacificorp paid, which is good news considering Powercor is facing a 21 per cent reduction in its tariffs." The Australian power sector is undergoing a regulatory review, the outcome of which is expected to be announced in January 2001.

National Power is expected to exercise its option to buy the 19.9 per cent stake in the Hazlewood plant once the deal between Scottish and Mr Li is complete.

Shares in ScottishPower yesterday fell 19.5p to end at 543.5p.