Bank of America has snapped up debt in the Bluewaters coal fired power station, in an escalating drama where lenders are staging an exodus from the asset that is due to be refinanced.
As revealed by DataRoom online on Tuesday, Bank of America purchased debt in the power station as German bank Bayern became the latest lender to divest loans.
The face value of the debt pile is about $369m.
Bank of America’s acquisition of a parcel of the debt in recent days comes after DataRoom revealed on July 23 that Oaktree Capital Management had snapped up debt for 71c in the dollar.
The $36m of loans purchased were held by ANZ.
Other lenders to offload loans in recent days have included the NAB, which has sold down debt with a face value of about $22m, Societe Generale Group, which offloaded about 8 per cent of the loans, Bank of Ireland and Westpac, which sold down about 4 per cent.
It comes after tension has been building between the West Australia-based power station’s owner, Sumitomo, which owns an interest of about 50 per cent in the asset, and its financiers.
Kansai Electric owns the remainder of the asset.
It is understood that Sumitomo has been offering to buy out the lenders – initially for 64c in the dollar and then more recently for about 66c.
However, the lenders have found better offers elsewhere and opted to cut their losses.
As revealed by DataRoom, Sumitomo is understood to have hired restructuring firm Houlihan Lokey for Bluewaters Power Station.
Attempts to secure hundreds of millions of dollars to refinance the asset have been made over the past months.
But the fact the power station is coal-fired means securing bank debt is seen as a near impossible feat.
Earlier, some predicted owners would have to stump up equity to ensure Bluewaters continues to operate.
Banks have shied away from gaining exposure to thermal coal-related assets as concerns grow about climate change and the impact of coal on the environment.
McGrath Nicol is working with the lenders, along with law firm G+T, while Japanese bank MUFG is working as the financial adviser to the Bluewaters company.
Law firm Clayton Utz is also working for Sumitomo.
Sumitomo and Kansai Electric purchased Bluewaters power station in 2011 from former tycoon Ric Stowe, outlaying about $1.2bn for the asset.
The power station at Collie, 200km south of Perth, was part of Mr Stowe’s Griffin Group, which at the time was in the hands of KordaMentha after it collapsed with debts worth $1bn linked to its power station development.
At the time, it was Kansai Electric’s first move into the Australian power-generation sector and its second major investment in Australia after it grabbed a 5 per cent stake in Woodside Petroleum’s $14bn Pluto gas project in 2008.
Sumitomo already owned a 70 per cent interest in a gas-fired power plant, formerly owned by Babcock & Brown, at Kwinana, south of Perth.
The power station was to be supplied by the Indian-owned Griffin Coal.
UBS and Macquarie Capital worked on the transaction.
The power station was built by Griffin Energy in 2009 and has a total electricity generation capacity of about 430 megawatts.
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