Skip, Stonepeak walk away from Genex takeover bid
A $346m play for renewable energy company Genex has fallen through, with Scott Farquhar’s Skip Capital and Stonepeak Partners walking away.
US private equity giant Stonepeak Partners has walked away from a proposed takeover of Genex Power, with the consortium including Atlassian billionaire Scott Farquhar abandoning its 25c a share bid on Wednesday.
Genex has been in talks with Mr Farquhar’s Skip Capital and Stonepeak Partners since August over a $346m bid to take the company private, but the pair said they had been “unable to find an acceptable path forward” after problems with flooding stopped work on the company’s pumped hydro project in Queensland for several months.
Genex shares tumbled on the news, closing down 18.8 per cent, or 3c, at 13c on Wednesday.
Genex said the consortium had walked away from the offer after completing elongated due diligence investigations, complicated by a major setback at the company’s signature project in September.
Genex’s major project 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.
The project has been backed by the federal government’s Northern Australia Infrastructure Facility though a $600m loan, with the Queensland state government kicking in $147m towards a transmission line to link the north Queensland firming facility to the state’s grid.
Kidston is a key part of the Queensland government’s plan to end its reliance on coal-fired power, with Genex having signed a 30-year offtake agreement for firming capacity from the project with EnergyAustralia.
“Genex announces that, following this extended period of due diligence and discussions with the consortium, the consortium has today advised Genex that it will cease to pursue its Indicative Proposal,” the company said.
“Accordingly, the board has determined to cease all discussions with the consortium in relation to its indicative proposal and a possible change of control transaction.”
Skip owned about 20 per cent of Genex shares ahead of the bid, with Stonepeak also a substantial holder as part of its association with the consortium.
But Stonepeak on Wednesday issued a notice to the sharemarket indicting it should no longer be seen as Skip’s partner in the Genex shareholders, suggesting the US private equity giant is the party with cold feet over the flooding at the pumped hydro project.
A spokesman for the consortium said it was “disappointed to have been unable to find an acceptable path forward”.
“As Genex’s largest shareholder, the Skip Essential Infrastructure Fund will continue to work constructively with the company and will continue to invest in Australia’s energy transition,” he said.
The Australian understands the flooding at the tunnel linking the upper and lower reservoirs at the former gold mine raised the risk levels for the project to unacceptable levels for the consortium to continue, amid concerns the geological fault could still pose long term issues for the project.
Genex said on December 5 work had resumed at Kidston after the flooding, after the company realigned the main access tunnel for the pumped hydro plant.
The additional work is likely to add $10m to $15m to the cost of the $775m project, the company has said.
Genex shares have been trading well below the 25c offer price since the flooding incident occurred, amid market speculation the setback could see the takeover offer fall through.
Genex said its board still believed the company had “compelling future prospects”, and the company remained focused on delivering the pumped hydro project by mid-2024.
The failure of the takeover talks comes despite heightened interest in renewable energy companies with Australian assets, after Andrew Forrest’s $4bn acquisition of CWP Renewables from Partners Group in early December.
