AGL Rejoins CKI and HK Electric in ETSA Businesses

14 January, 2000 -- Hong Kong

Two weeks prior to the completion of the acquisition of the Electricity Trust of South Australia (ETSA) businesses, Cheung Kong Infrastructure Holdings Ltd (CKI) and Hongkong Electric Holdings Ltd (HEH) has got their former Australian bidding partner rejoining their ETSA businesses.

CKI and HEH have signed an agreement with the Australian Gas Light Co (AGL) today for the ETSA Power portion of the tender, which was awarded by the South Australian Government to CKI and HEH in December 1999. As a result, on January 28, the scheduled settlement date of the transactions, CKI and HEH will complete their acquisition of ETSA Utilities at A$3.25 billion (approx HK$16.7 billion), and AGL its acquisition of ETSA Power at A$175 million (approx HK$901 million) respectively with the South Australian government.

The awarding of ETSA Power to AGL was the result of a competitive tender process conducted by CKI and HEH. Both the tender process and selection of AGL as the successful tenderer have been approved by the South Australian Government.

AGL was originally a partner of CKI and HEH when bidding for the ETSA businesses but decided to withdraw from the bid consortium before the final tender was submitted. When forming the original consortium, the intent was that CKI and HEH would operate ETSA Utilities, and AGL the ETSA Power portion of the business should the bid be won. With AGL's departure, CKI and HEH submitted a tender for the combined ETSA Utilities/ETSA Power business.

When CKI and HEH was awarded the ETSA Utilities /ETSA Power tender at A$3.4 billion (approx HK$17.5 billion) last month, it was agreed between the South Australian Government and CKI/HEH that should ETSA Power be sold within two years after the tender was awarded, any amount generated above A$150 million (approx HK$772.5 million) is to belong to the South Australian government.

"We are very happy with AGL's acquisition of ETSA Power. They were our partner originally in the bidding consortium. We have always been very impressed with their expertise and experience in the business of energy retail," said Mr H L Kam, Managing Director of CKI.

"This is another win, win, win situation. Our major interest has always been in the infrastructure regulated business ie the power distribution portion, while AGL has always been keen on the retail portion. Their rejoining us presently best serves the interest of both parties. Moreover, the South Australian government will receive an additional A$25 million (approx HK$128.8 million) from the deal," expressed Mr Kam.

"For CKI and HEH, this means that we are acquiring ETSA Utilities at the reasonable price of A$3.25 billion (approx HK$16.7 billion) for a secure, stable business with good returns at a low EBITDA of 9. This is an excellent investment for CKI and HEH," concluded Mr Kam.

A venture with CKI and HEH each holding 50% shareholding was awarded the tender for the operation of the distribution and retail service of ETSA ¡V ETSA Utilities, the distribution arm; and ETSA Power, the retail operations in December 1999. The tender was put out by the South Australian Government and is the first privatization opportunity in South Australia's power industry.

AGL is the largest energy retailing company in Australia, with extensive interests in retailing natural gas, electricity and LPG. It is among the leading Australian companies listed on the Australian Stock Exchange with a market capitalisation in excess of A$3 billion (approx HK$15.5 billion).

CKI is a constituent stock of the Hang Seng Index. In terms of market capitalization, CKI is the largest publicly listed infrastructure company in Hong Kong. CKI's three core businesses are infrastructure materials, energy, and transportation. The company has investments in Mainland China, Hong Kong, the Philippines, and Australia.

HEH, another constituent stock of the Hang Seng Index, is the listed vehicle of the Hongkong Electric Group of companies which includes The Hongkong Electric Company Limited (HEC). HEC is an electricity utility first established in 1889. The Company's principal activity is to generate and supply electricity in Hong Kong Island and Lamma Island.

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