SPAusNet – BT

SP AusNet seeks to raise A$415m in share sale

Company’s full-year income down 6.7% to A$147m

(MELBOURNE) SP AusNet, the Australian electricity distributor 51 per cent owned by Singapore Power Ltd, is seeking A$415 million (S$462.6 million) from a share sale to strengthen its power and gas supply network in Victoria state.

Investors will be offered one share for every four they own at 78 Australian cents, the Melbourne- based company said in a statement to the Australian stock exchange yesterday. That’s 13 per cent below the last traded price of 90 Australian cents.

Capital spending is projected to rise 18 per cent in the year ending March 31, 2010 because of increased energy demand in Australia’s second-largest city, SP AusNet said.

It joins Santos Ltd in seeking funds from investors. The nation’s third-biggest oil and gas producer said on Monday it was raising as much as A$3 billion in a share sale.

‘The capital raising is well in excess of our expectations,’ Credit Suisse Group analysts led by Sandra McCullagh said in a note yesterday. ‘We had assumed that SP AusNet could cut distributions over the next five years to fund growth capex whilst maintaining it’s A-minus credit rating,’ said Sydney-based Ms McCullagh, who rates the stock ‘outperform’.

SP AusNet has dropped 5.3 per cent since the start of the year, compared with a 2.3 per cent decline in the exchange’s utilities index.

Of the share offer, A$330 million for sale to institutional investors is fully underwritten by Macquarie Group Ltd and UBS AG, SP AusNet said, with a further A$85 million available to retail investors. Singapore Power intends to take up its full entitlement of A$211 million.

Funds will also be used to support its A-range credit rating, SP AusNet said.

‘By strengthening our balance sheet and providing a prudent funding flexibility, these capital management initiatives will complement SP AusNet’s existing ability to deliver sustainable growth in security holder value,’ SP AusNet managing director Nino Ficca said. The recession hasn’t caused a slowdown in new customer connections, chief financial officer Geoff Nicholson said.

Full-year net income fell 6.7 per cent to A$146.9 million in the 12 months ended March 31, SP AusNet said separately yesterday. SP AusNet took a A$30.3 million after-tax charge after the writedown of meters to be replaced in Victoria.

Earnings before interest, tax, depreciation and amortisation rose 9.5 per cent to A$709.6 million.

SP AusNet declared a final distribution of 5.927 Australian cents, bringing the total for the year to 11.854 cents. Distributions in the 12 months to March 31, 2010 are expected to be eight Australian cents per security, SP AusNet said.

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