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Entergy to Buy Australian Utility

Fortnightly Magazine - February 1 1996

It looks like PacifiCorp will have a little competition down under. A $1.2-billion conditional bid for an Australian electric utility (em made by an Entergy subsidiary, Entergy Power Group (em has been accepted by the State of Victoria. The utility, Citipower, provides electric service to Melbourne, and is one of five electric distribution systems being sold under Victoria's privatization program.

According to Moody's Investors Service, the proposed acquisition will not affect the ratings of Entergy's six operating subsidiaries, unless Entergy's capital investment exceeds 40 percent of the reported transaction price. Given the structure of similar privatization transactions in Australia and England, Moody's considers such an investment unlikely. Moody's places the total common equity of Entergy at more than $6.5 billion, and finds the transaction consistent with the company's stated goal of investing $1 billion in nonregulated businesses by the end of the decade.

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