TransCanada Corporation is to exit the Indonesian power market after agreeing to sell its approximate 11% interest in PT Paiton Energy Company to subsidiaries of The Tokyo Electric Power Company for approximately $103 million.
Paiton Energy owns two 615 megawatt coal-fired power plants in East Java, Indonesia. The transaction is expected to close in the third quarter of 2005, subject to various approvals. TransCanada expects to realize an after tax gain of approximately CDN$115 million.
We’re pleased to have reached an agreement to sell one of our few remaining international assets, said Hal Kvisle, TransCanada’s CEO. This is another clear example of TransCanada’s disciplined approach in divesting non-core assets and redeploying the proceeds into our core businesses of gas transmission and power services in North America.
TransCanada, which predominantly operates in North America, acquired its interest in Paiton Energy in 1996. However by 1999 the company had decided to make a strategic retreat from international operations and resolved to sell its overseas assets. It has taken until now for the sale to be agreed because the company decided to hold onto its Indonesian asset until favourable conditions arose.