APA Group said it will acquire Alinta Energy’s power assets in Western Australia’s remote Pilbara region for A$1.7 billion ($1.1 billion) including debt, as it looks to expand in power production.
To fund the purchase, Australia’s biggest gas pipeline operator plans to raise A$750 million with new equity.
APA CEO Adam Watson said the deal was very much a renewable energy market play, tapping into the desire on the part of the government and miners in Pilbara to shift to renewable power generation.
“That’s the model that’s played out in the more progressive, decarbonisation-led regions of the world like the U.K. and the Netherlands,” he told Reuters in an interview.
“The remote grid sections of Australia need to do the same thing…,” he said.
The Pilbara assets include two dual-fuel gas- and diesel-fired power stations – the 210 megawatts (MW) Port Hedland station and the 238 MW Newman power station as well as 200 kilometres of high voltage power transmission lines.
In terms of renewable and storage assets, they also include the Chichester solar farm and 900 megawatts worth of projects in development.
Alinta, which is owned by Hong Kong-based Chow Tai Fook Enterprises, said the sale will help it focus on ambitious projects – including the 1 GW Spinifex offshore wind project in Portland, Victoria, and the 900 MW Oven Mountain Pumped Hydro project in New South Wales.
APA’s acquisition costs include net debt of A$65 million.
The fundraising was comprised of a A$675 million pro-rata institutional placement and a A$75 million share purchase plan and was priced at $A8.50 per share, an 8.2% discount to the previous close.
The balance of the purchase price will be funded by new debt, APA said.
“We’re confident we’ll get the support of our investors because this is right on strategy,” Watson said.
APA shares were on a trading halt on Wednesday.
The company reported on Wednesday that full-year underlying earnings before interest, tax, depreciation and amortisation (EBITDA) climbed 2% to $1.73 billion, driven by gains in its energy infrastructure segment.
Source: Reuters.com