CBA Hazelwood writedown comments

26 Oct 2010

CBA Chairman David Turner says the bank has written down its investment in Hazelwood to $1 million. What does that mean for the overall value of Hazelwood?

It’s important to understand what we’re talking about here. International Power owns 91.8 per cent of Hazelwood, Colonial First State 6.1 per cent and the Commonwealth Bank 2.1 per cent. The CBA Chairman indicated at its annual meeting today that the bank had written down its investment in Hazelwood to $1 million. It is the bank’s prerogative – as it is with all investors – to place its own value onitsequityinvestments. Ineffect,we’retalkingaboutaninternalaccountingtreatmentofthebank’s investment and in our view there is currently no trigger for this impairment decision. However that does not in any way affect the overall enterprise value of the business.

What value does International Power attach to its investment in Hazelwood? 

International Power does not intend to disclose what is clearly commercially sensitive and confidential information about its investments. However, it should be remembered that International Power purchased the Hazelwood business in 1996 for $2.35 billion and with the State and Federal Government’s blessing has invested significantly more funds to make the plant more efficient. 

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CBA Hazelwood write down comments