Genex Power hydro hitch amid takeover bid

Genex Power remains in takeover talks with tech titan Scott Farquhar but its key hydro project in Queensland has hit a hurdle.

Genex Power, the energy firm being pursued by Atlassian billionaire Scott Farquhar, says its signature project in Queensland has suffered tunnelling disruptions, while the takeover deal remains in negotiations two months after the suitors tabled a higher bid.

Genex’s main draw is its Kidston renewable energy hub in far north Queensland, which includes a 250 megawatt hydro project, 50MW solar farm, a further 270MW solar development and a 150MW wind farm.

Construction at the hydro project suffered flooding in underground tunnelling on September 24, Genex said on Friday, due to an unexpected geological issue.

The development remains on track to come online in the second half of 2024, with Genex pointing to adequate contingency funds in the overall project budget, while noting that “at this stage” there was no increase in the project cost. Drill holes have been plugged and investigation works are under way to determine the problem and plan for excavation to continue.

The Genex solar and future hydrogen pump project at Kidston. Photo: Michael Chambers.

Genex said on August 17 that Mr Farquhar’s Skip Essential Infrastructure Fund and Stonepeak had increased their offer to 25c a share, which was enough for the board to open the company’s books for detailed due diligence.

The only update on the deal since then was a statement on September 23 denying speculation that due diligence had ended and noting the consortium had not provided a binding or final proposal for the transaction.

Genex on Friday said it would continue to keep shareholders informed about the deal, in accordance with its obligations.

A slump in Genex’s share price – it last traded at 20c, compared to the 25c a share bid – has thrown up questions over momentum for the deal. However, the fact that Skip holds 19.9 per cent of the company may deter other interested parties.

Genex is one of the last remaining renewable companies on the ASX, after Tilt Renewables was taken over by an AGL-led group last year for $2.9bn.

EnergyAustralia has signed a 10-year deal to buy power from the Kidston facility, west of Townsville, with two further decade-long options available including control of the plant’s operational and dispatch rights.

Genex has received a $610m loan from the Northern Australia Infrastructure Facility and counts Japan’s J-Power as an investor.