TransAlta targets generation and transmission for growth
CALGARY, Alberta (Jan. 17, 2000) -- TransAlta Corporation announced today that it intends to focus its growth and investments on its generation and transmission businesses. This targeted strategic focus capitalizes on its strengths as a low-cost operator of generation and transmission assets, and as a successful independent power developer.
As part of this decision, the company announced its intent to sell its Alberta retail and distribution businesses. TransAlta Corporation also announced that its New Zealand subsidiaries, TEC Limited and TransNewZealand Energy Limited, have received notice of a proposed offer to purchase their interests in TransAlta New Zealand Limited. Any formal offer received will be reviewed in light of the announced strategic focus.
"We want to target our resources to best deliver future earnings growth which, in turn, ensures the current strong dividend to our shareholders," says Steve Snyder, president and CEO, TransAlta Corporation. "This is best accomplished by focusing our available resources on our businesses with clear-cut competitive advantage -- our low-cost generation and transmission assets and our independent power developments."
In addition to nearly 4,500 megawatts of coal-fired and hydroelectric generating capability in Alberta, TransAlta has almost 2,200 megawatts of gas-fired generation operating and in development in North America and selected international markets. The company is currently finalizing a transaction for a 1,340 megawatt, coal-fired power plant in Washington state, which is expected to close in the first quarter of 2000.
"The electricity industry continues to deregulate. The rules are changing, and this dynamic market provides an opportunity for TransAlta to move quickly to build a focused competitive edge," said Snyder.
With this announcement, TransAlta is taking two critical steps to achieve its strategy: the decision to sell its Alberta retail and distribution businesses, and negotiations to sell the New Zealand assets.
"Retail and distribution are good businesses to be in but you must have sufficient scale to be successful," Snyder says. "We decided that we would best serve our shareholders by focusing our investments to build scale in generation and transmission."
TransAlta is currently in discussions with potential buyers for the Alberta assets. The intent is to complete negotiations as quickly as possible and conclude the transaction, including regulatory approval, by the end of the year. The sale is expected to raise substantially more than the book value of $500 million to reinvest in the growth strategy.
The Alberta retail and distribution businesses represent 10 per cent of the company's assets, involve about 650 employees and serve 350,000 customers.
"We believe the Alberta sale will result in benefits for everyone," Snyder explains. "Employees who stay with TransAlta will be part of a company dedicated to a focused growth strategy. Employees who move with a sale will become part of a company focused on being successful in retail and distribution."
The sale announcement will have no impact on service to customers. "Customers can expect to receive safe and reliable electrical supply throughout and beyond a transition to a new owner," says Snyder.
As for the New Zealand announcement, TransAlta Corporation says that notice of a proposed offer to purchase its subsidiaries' 75.8 per cent interest in TransAlta New Zealand Limited has been given by Natural Gas Corporation Holdings Limited (NGC). TransAlta's wholly-owned subsidiaries, TEC Investments Limited and TransNewZealand Energy Limited, together hold a 75.8 per cent interest. Under New Zealand stock exchange rules, the notice begins a standard three-day pause period before any offer can be discussed publicly or accepted. NGC is a subsidiary of the Australian Gas Light Company.
"Preliminary negotiations have resulted in this notice of Natural Gas Corporation's interest in acquiring the New Zealand assets," says Snyder. "Negotiations are ongoing and we will consult with our board of directors on any formal offer. We intend to announce a decision as quickly as possible."
In its notice, Natural Gas Corporation indicated a purchase price in the range of $2.60 NZ to $3.10 NZ per share. TransAlta Corporation holds, indirectly through its wholly-owned subsidiaries, some 187 million shares in TransAlta New Zealand. The sale would also include the subsidiaries' approximately $80 million NZ capital notes in TransAlta New Zealand and approximately $217 million NZ in debt associated with the Taranaki generation plant. The transaction would result in total proceeds of between $600 million Cdn to $660 million Cdn.
TransAlta is an electric energy company with more than $6 billion in assets. The company is focused on growing its competitive edge in generation and transmission in Canada, the United States and selected international markets.
For more information:
Send mail to Corporate Communications
Phone: (403) 267-3678
Send mail to Investor Relations
Phone: 1-800-387-3598 in Canada
Phone: (403) 267-2520 in Calgary & outside of Canada
Fax: (403) 267-2590
Page last modified 2000/02/06
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