Revealed: AGL's and Toll Holdings' $5.7bn loan rangers - Business - Business

AUSTRALIAN Gas Light Co, the country's largest gas retailer, and freight company Toll Holdings tried to borrow up to $5.7 billion this week as Asia's growing economy spurred Australian businesses to expand.

AGL and Malaysia's Petroliam Nasional Bhd picked ABN Amro Holding NV to help raise up to $4.5 billion to build a natural gas pipeline, a banker involved in the deal said.

Toll is seeking $S1.4 billion ($A860 million) to buy a storage and distribution company in Singapore.

Australia's economy, the Asia-Pacific region's fifth-largest, is in its 15th year of expansion and will probably grow 3 per cent or more this year from 2.5 per cent in 2005, according to the Reserve Bank. Asia's economy excluding Japan is forecast to increase 6.9 per cent this year, according to the International Monetary Fund.

"Australia is a mature market and lending to companies there helps to diversify risk in our loan portfolios", which include credits to companies in emerging markets such as Vietnam, said Joris Dierckx, head of export and project finance at Fortis in Singapore.

"Australian Gas Light is a good credit risk, we will definitely look at providing the financing."

Companies in Australia got $80 billion of loans in 2005, a 40 per cent increase from the previous year, Bloomberg research shows.

Australian borrowers took out the second-largest amount of syndicated loans in Asia after Japan.

AGL and Petroliam Nasional, or Petronas, need up to $6.1 billion to build part of a pipeline from Papua New Guinea to Australia. ABN Amro would invite banks to arrange the financing, which may comprise loans, bonds or a combination of the two, said the bankers, who would not be identified.

Petronas and AGL each own half of a venture that will build and own the Australian section of the 4000-kilometre pipeline. AGL said in December that the part of the pipeline from the Papua New Guinea border to eastern Australia might cost about $4 billion.

Energy companies led by ExxonMobil spent more than five years trying to convince enough customers to sign up to the new gas supply. The venture still needs final approval from Exxon and its partners in the second quarter.

Toll Holdings, Australia's largest freight company, hired ANZ and Citigroup for a loan to fund its $S1.4 billion purchase of SembCorp Industries' logistics unit.

Buying the company will give Melbourne-based Toll a transportation and warehousing network stretching from India to China.

The loan would mature in less than a year, said Aziz Dean, Citigroup's Sydney-based managing director of fixed-income capital markets for Australia and New Zealand.

Companies in Australia got about $30 billion of loans to fund acquisitions in 2005, more than double the amount in 2004. ANZ is the largest syndicated loan underwriter, accounting for 20 per cent of loans arranged last year.

BLOOMBERG