Singapore's state-owned investment company Temasek Holdings has made the sale of the 3300 MW Senoko Power Limited more lucrative for the five bidders that include Tata Power, by offering optional financial arrangement for a loan as the second round of bids start tomorrow.

This financial arrangement offered by Temasek is aimed at providing a suitable source of funding for the buyer as the global economic slowdown has caused a liquidity crunch as lenders have had to write-off over $500 billion of losses in the wake of the collapse of the US sub prime mortgage market .

Temasek's advisors for the sale of Senoko, Credit Suisse Group AG and Morgan Stanley & Co will arrange a bridge loan for two years at about 2.5 percentage points over the London Interbank Offered Rate (LIBOR).

DBS Group Holdings Limited and United Overseas Bank Limited are the likely bankers to finance the deal for up to 70 per cent of the bid amount.

In early August, Tata Power emerged one of the shortlisted companies in the race for Senoko along with Japan's Marubeni Corporation, Malaysia's YTL Power Bhd, France-based GDF Suez and a tie-up between Hong Kong's CLP Holdings and Japan's Mitsubishi Corp - OneEnergy Ltd. (See: Tata Power shortlisted to bid for Senoko Power-Singapore) 

Senoko Power is the second of the three power generating companies that Temasek had planned to divest. After the successful sale of Tuas Power to SinoSing Power Pte Ltd earlier in March to China's Huaneng Group for 2.95 billion, Temasek announced the divestment process of Senoko Power in July 2008. It also said that it would sell its third power generation company PowerSeraya after the sale of Senoko.

Senoko and Seraya were restructured from Singapore Power as independent and competitive gencos after the transfer of Singapore Power to Temasek in 1995. Tuas Power was set up independently as the third genco in 2001 as part of the national plan to have liberalised and competitive electricity generating market in Singapore.

The sale of Senoko involved a two-stage process with interested companies initially submitting a non-binding expression of interest. Later, the shortlisted companies will be allowed to conduct due diligence before making their binding offers, expected this month. The sale of Senoko Power is scheduled to be completed by the end of 2009.

After a further round of short listing the selected companies will be invited to participate for negotiations before some clarity emerges on the possible frontranker for the acquisition.

Senoko, a profitable power unit that generates a third of Singapore's electricity, had revenues of S$2,495 million and EBITDA of S$245 million for the year ended 31 March 2008.