Parent To Divest Retail Supplier, Says Sale Process "Well Advanced"

In recently reporting earnings, ERM Power Limited said that a sale process for its U.S. business Source Power & Gas, "is well advanced."

In an annual report for the year ending June 30, 2018, ERM Power Managing Director and CEO Jon Stretch said the US retail business delivered strong sales growth at 6.3TWh and forward contract load of 15.6TWh while gross margin was lower than expected. In a May 2018 report, Australian-based ERM had said that gross margin for the US business in FY2018 had been expected to be around A$3.70/MWh relative to the A$4.50/MWh previously indicated, and about A$3.30/MWh in FY2019.

The US business, treated as discontinued in the financial statements, is now held for sale following a comprehensive review to determine the best strategy for realizing shareholder value.

"We have a sale transaction process underway which is well advanced and expected to conclude in the first half of FY2019," Stretch said.

"Source Power & Gas electricity sales have grown roughly six times since acquisition in 2015. The business is attractive to a range of US market participants who have the business models to realise value from SPG," Stretch said.

ERM said that shareholder value is best realized in SP&G divestment and deployment of capital to Australian operations