The extension presents a cold shoulder to the latest bid from US based AES (not the local O&G minnow) which had called for the Loy Yang banking syndicate to put the station into receivership after the expiry of an exclusive AGL-led negotiating period on December 19. The company would then offer to acquire the assets and repay the $3.1 billion in debt owed by LYP.

However, the extension has been granted to enable the AGL led Great Energy Alliance Corporation (GEAC) and the LYP partners to satisfy the conditions precedent to the Sale Agreement dated 3 July 2003.

Most significantly GEAC is pursuing a resolution of the ACCC issues in regard to the sale with AGL beginning an expedited hearing for declaratory relief in the Federal Court with the hearing to start on 18 November 2003. A judgment is anticipated by 19 December 2003.

Loy Yang Power Group will also use the time extension to continue negotiations with the lenders of a debt restructure and long term standstill if the sale conditions are unable to be satisfied.

However, under the agreement to extend the date for repayment, the lenders have a right to terminate the extension if a majority of the lenders form the view that the share sale to GEAC will not be concluded on terms acceptable to the lenders before 12 February 2004.

Currently the AES bid is still on the table with the US energy major guaranteeing no job losses, workers entitlements and existing enterprise bargaining agreements.

Although after the recent failures of large scale American investments in the Australian energy market, (see Duke Energy, Epic Energy, Trans Alta, TXU and Aquila to name a few) some would be hesitant to follow the same route.