UPDATE 2-Econergy rejects Trading Emissions approach

(Adds source comment, analyst comment, shares)

By Chris Wills

LONDON, April 11 (Reuters) - London-listed Econergy International ECG.L rejected a below-its-share price approach from carbon credit developer Trading Emissions (TREM.L) on Friday as a source familiar with the situation confirmed the U.S.-based company has received two approaches.

Econergy, a Boulder, Colorado-based company which invests in renewable power projects mainly in Latin America, received a rival approach from British-based entrepreneur Vincent Tchenguiz on Thursday, though he did not indicate an offer price.

Shares in Econergy were up 5.2 percent at 30.5 pence by 1233 GMT, as analysts said there could be a bidding war.

That's above the level of the rejected 27.5p all-share offer from Trading Emissions, which Trading Emissions made on March 27, but which Econergy only revealed on Friday.

Trading Emissions invests in renewable power projects around the world, particularly in China, to generate carbon credits.

Run by Simon Shaw of EEA Fund Management and chaired by Neil Eckert, the CEO of Climate Exchange (CLIE.L), it also buys carbon credits from projects owned by others to hold onto them until emissions restrictions are tightened and it can earn more selling the credits.

Trading Emissions, valued around 330 million pounds ($652 million), is not interested in the carbon credits Econergy's hydro and wind projects in Brazil and Costa Rica can generate, analyst Gus Hochschild at broker Dawnay, Day said.

"Trading Emissions could take the view they will be able to finance this better than anyone else and some of these projects will be very cash generative," he said, describing Econergy's carbon credit portfolio as "piffling". See [ID:nL13879584]

Econergy would struggle to finance all five of its under-development projects on its own because of the credit crunch and difficulties raising debt, he said.

Trading Emissions, which dwarfs Econergy's 28 million pounds market cap, already has a 2 percent stake in the company and is developing its own hyrdo plant in Peru.

Tchenguiz said in a statement on Thursday he thought Econergy's potential can best be realised in the private sector.

However, an analyst speculated the reviewing of options for his 18.3 percent stake could be designed to draw attention to the fact he might be willing to sell it.

"Econergy has received just the two approaches," said a source close to the company on Thursday, after Econergy said it had received a "number of approaches". (Editing by Erica Billingham, David Cowell and Mike Elliott)