SPAusNet – BT

SP Ausnet to buy Alinta assets for A$8b

SYDNEY – Australian infrastructure firm SP Ausnet said on Thursday it has agreed with Singapore Power to buy some assets of energy firm Alinta for A$8.142 billion (US$6.96 billion).

SP Ausnet, which owns and operates electricity and gas transmission networks in Victoria state, said the acquisition will be funded by a mixture of debt and equity, including a rights issue to security holders.

SP Ausnet reaffirmed its full year distribution guidance for 2007/2008 and said the acquisition of Alinta assets, which include a gas distribution network in the state of New South Wales and a electricity network in Victoria state, would make it one of the largest infrastructure businesses in Australia.

Analysts said the acquisition was too expensive and would dilute SP Ausnet’s value as well as jeopardise the firm’s distribution yield.

‘A rights issue would need to be done at a steep discount given the Alinta deal is dilutive, the size of the rights issue and SP Ausnet’s lacklustre performance since listing in 2005,’ said Merrill Lynch analyst Matthew Spence.

Alinta, previously Australia’s largest energy infrastructure firm, was acquired and carved up by a consortium of investment firm Babcock & Brown Ltd and state-owned utility Singapore Power.

‘The opportunity to expand our operations outside the geographic boundaries of Victoria, as well as into the area of gas transmission, is something that we have been working on for some time,’ SP Ausnet Managing Director Nino Ficca said in a statement.

The company said the purchase of gas and electricity transmission assets in New South Wales and Queensland would also position it for possible future privatisation of the two states’ energy infrastructure.

Singapore Power owns 51 per cent of SP Ausnet, which was listed in Australia and Singapore in December 2005.

Analysts have raised concerns about the impact on SP Ausnet’s share price and dividends if it bought Alinta assets, given the high price Babcock and Singapore Power paid in their A$8 billion takeover.

Investment banks UBS AG and Morgan Stanley, which will be managing the rights issue, will underwrite the balance of A$1 billion to fund the transaction, the paper said.

SP Ausnet declined to give any financial forecasts for the transaction during a briefing, saying that a detailed report would be issued later this year. SP Ausnet said the acquisition was subject to security holders’ approval. The company plans to hold a meeting with security holders before the end of the year. — REUTERS

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