SPAusNet – BT

SP AusNet plans to raise A$3.02b in share sale

Proceeds will fund purchase of assets from parent

SP AusNet, the Melbourne- based power distributor 51 per cent owned by Singapore Power Ltd, plans to raise A$3.02 billion (S$4.08 billion) by selling shares to help fund the purchase of Australian assets from its parent.

The price of the new shares will be no less than A$1.1 apiece and details of the sale will be announced later, SP AusNet said in a statement to shareholders yesterday.

The utility will borrow A$4.33 billion to contribute to the cost of acquiring the assets, formerly owned by Alinta Ltd.

The A$8.32 billion transaction will make SP AusNet Australia’s largest energy transmission company.

Parent Singapore Power bought the assets from Alinta in August, including Alinta’s energy distribution networks and pipelines in New South Wales, Victoria and Queensland.

‘The transaction is expected to be distributions accretive and have a positive impact for securityholders,’ SP AusNet chairman Ng Kee Choe said in a separate statement.

It ‘provides access to new capabilities and enhanced opportunities for growth through asset expansion, increased energy demand and the provision of asset management services’.

The power distributor’s shares fell 0.4 per cent to A$1.245 by 2.43 pm in Sydney, trailing the 0.1 per cent drop in the exchange’s benchmark utilities index.

The balance of the funds needed for the acquisition will come from the assumption of Alinta debt and hedge liabilities, it said.

Dividend payments will increase by an estimated 2.5 per cent in 2009, SP AusNet said.

Shareholders are scheduled to vote on the transaction on Dec 11 and the transaction is expected to be completed by Dec 21.

SP AusNet’s credit rating will be cut should shareholders approve the transaction and the equity raising proceed to ‘A-‘ from ‘A,’ Standard & Poor’s Ratings Services said yesterday. SP AusNet remains on ‘CreditWatch’ with negative implications.

‘Although SP AusNet will benefit from business, geographic, and regulatory diversity, the group’s cash-flow metrics will deteriorate substantially because of the proposed high debt levels,’ Standard & Poor’s analyst Parvathy Iyer said.

Morgan Stanley Australia Securities Ltd, Goldman Sachs JBWere Pty Ltd and UBS AG are the proposed underwriters of the share sale, SP AusNet said. — Bloomberg

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