It’s not only AGL Energy that is sniffing around the possible break up of Alinta by either Babcock and Brown or Macquarie Bank.
SP AusNet says the Alinta assets its majority owner, Singapore Power, is interested in would be a good fit with SP AusNet’s business profile.
Singapore Power has previously said it is interested in regulated or contracted assets. It is in a bid with Babcock and Brown for Alinta that may or may not succeed, such is the complexity and at times confusion surrounding the deal.
SP AusNet managing director Nino Ficca said yesterday, “That is consistent with the sort of profile that SP AusNet has”.
He told a corporatefile Open Briefing on the ASX:
“We’ve established a Board committee to oversee an independent review process for the assessment of this opportunity. The process includes the appointment of independent advisors to assist in the review.
“The assets that may be acquired by Singapore Power and subsequently offered to us are consistent with our existing portfolio of energy transmission and distribution assets. As with any acquisition, we’ll assess the assets in terms of their capacity to increase value for our security holders.
“The opportunity to expand our operations outside the geographic boundaries of Victoria, as well as into gas transmission, is one we’ve been working on for some time.
“The assets are considered to be of the same high quality as our existing assets and are predominantly regulated.
“Should Singapore Power be successful in the bid, and we choose to acquire some or all of the assets, our funding requirements will be assessed at the appropriate time.”
AGL Energy said earlier this month that it will buy the remaining 67 per cent of the AlintaAGL retail business from Macquarie Bank Limited for a net consideration of $345 million, should Macquarie successfully acquire Alinta.
Under the agreement, AGL Sales, a wholly owned subsidiary company of AGL, will buy the remaining interest in AlintaAGL’s retail business, and will procure that AGL will sell its 33 per cent interest in AlintaAGL’s co-generation assets to Macquarie.
AGL is currently the beneficial owner of 33 per cent of AlintaAGL’s retail business, which comprises 566,000 gas customers and 1, 600 electricity customers.
AlintaAGL owns the Western Australian retail business formerly owned by Alinta as well as cogeneration assets at Alcoa’s Pinjarra and Wagerup alumina refining plants.
AlintaAGL was set up following the Alinta AGL merger and subsequent demerger six months ago. AGL Energy is also in talks with Babcock over the AlintaAGL venture. Under an agreement reached between Alinta and AGL in 2006, any change of control at Alinta allows AGL to trigger an option to move to 100 percent ownership of AlintaAGL.
SP AusNet last year missed out on Queensland gas distributor Allgas. It is still interested in the Bass Strait power link which has been put up for sale by its owner, National Grid.
SP AusNet said it earned an “attributable net profit” of $178.297 million for the year to 31 March, down from $367.555 million in the prior year. (These figures were reached after one-off items)
But the company said a more accurate net profit from continuing operations was $161.246 million, up 18 per cent.
SP AusNet listed on the ASX at the end of 2005, said that profit from continuing operations result beat its prospectus forecast by 3.2 per cent.
The bottom line result included $17.1 million of profits and income tax adjustments for the 2005-06 year.
The company is 51 per cent owned by Singapore Power.
It declared a final distribution to security holders of 5.635 cents, taking the total payout for the year to 11.27 per cent, representing a yield of 7.7 per cent.
Revenue for the year was $1.019 billion, up 38 per cent and 2.2 per cent above forecast, while earnings before interest and tax (EBIT) was in line with its forecast at $424.7 million.
That gives an EBIT margin of around 42c in the dollar. It’s no wonder they load the balance sheets of utility companies up with debt for big deals and major asset buys with gross margins like this.
It gives you a hint of the attraction Macquarie Bank and B&B see in Alinta.
SPN shares edged half a cent higher to $1.47.5, near the all time high since listing 18 months ago of $1.50.
