EnergyAustralia holds cards in Genex Power buyout by Skip Essential Infrastructure Fund and Stonepeak

Genex Power chief executive officer James Harding, left, with Queensland Energy Minister Mick de Brenni at the site of the Kidston pumped hydro project. Picture: Peter Carruthers

EnergyAustralia could hold the cards when it comes to determining whether a $300m buyout of Genex Power stacks up for Scott Farquhar’s Skip Essential Infrastructure Fund and Stonepeak.

A key Genex asset is its Kidston Pumped Storage Hydro Project in North Queensland, which has the potential to power up to 100,000 homes during peak demand periods from 2025.

The project is expected to be finished in 2024.

EnergyAustralia has signed a binding energy storage services agreement, with the deal lasting for up to 30 years.

It has an initial term of 10 years and two options to extend for a further 10 years each.

Following the expiry of the 30-year term, EnergyAustralia has the right to acquire Genex’s shareholding in the project for a fixed cash payment.

The asset is a drawcard for Stonepeak and Skip, run by Kim Jackson, the wife of Atlassian co-founder Scott Farquhar.

But if EnergyAustralia opts to exercise its rights, it may not have the upside hoped for.

The Japanese power producer J-Power has 8 per cent of the company after purchasing a 10 per cent stake in Genex last year, and any winning bidder would likely need its support.

J-Power is a joint venture partner on Genex projects.

Should a rival suitor emerge, it may improve its changes of gaining control of the company by winning over its Japanese investor.

But Skip already owns at least 19 per cent of the business, which gives it a big advantage should another suitor emerge.

Genex’s board has yet to say whether it will accept the 23c a share bid from the Skip and Stonepeak consortium.

The offer values the target at $300m.

Stonepeak and Skip Essential are advised by Jarden and RBC and Genex is advised by Goldman Sachs.

Genex’s shares closed at 22c on Friday.