Alinta Bids for Rest of Alinta Infrastructure Unit


Nov. 15 (Bloomberg) -- Alinta Ltd., Australia's biggest energy transmission company, bid A$482 million ($369 million) for the rest of its gas pipeline and power generation unit, seeking to reverse a spinoff carried out 15 months ago.

Alinta will offer A$2.06 per partly paid share for the 80 percent of Alinta Infrastructure Holdings Ltd. it doesn't already own as part of a wider restructuring of the business, the Perth- based utility said today in a statement. The offer is 4.5 percent above yesterday's closing price for Alinta Infrastructure, or AIH.

Alinta sold the majority of Alinta Infrastructure, a gas transmission and power generation unit, in an initial offer in August last year to raise funds for expansion. The shares have traded below their A$2.00 sale price since November, making it difficult for the unit to raise equity to fund acquisitions, including assets Alinta bought from Australian Gas Light Co., or AGL, last month in a A$6.3 billion transaction.

``This is actually hugely embarrassing for Alinta; they spent a lot of money on advisory and investment banking fees, spinning of the assets and creating AIH,'' said John Deniz, a utilities analyst at Aegis Equities Research Pty. in Melbourne. ``Alinta is looking at the cheapest cost of funding for that transfer of assets from AGL and their optimal cost of funding is doing it under a merged Alinta-AIH approach.''

Shares in Alinta Infrastructure rose as much as 10 cents, or 5.1 percent, to A$2.07 on the Australian Stock Exchange. They were at A$2.06 at 11:25 a.m. Sydney time, on a par with the offer price. Alinta shares fell as much as 12 cents, or 1.2 percent, to A$10.30, their lowest for more than two weeks. They were at A$10.31 at 11:27 a.m. Sydney time.

`No Action'

The independent directors of Alinta Infrastructure, which is also based in Perth, advised shareholders to take no action toward the offer. The company hired Citigroup Inc. to advise it on the offer, and commissioned Grant Samuel to evaluate the bid before making a formal recommendation to shareholders.

Alinta Infrastructure owns Duke Energy Corp.'s Australian energy business that Alinta bought for $1.24 billion in April 2004. The company owns gas pipelines in southeastern Australia, Western Australia and Queensland, and power stations in Western Australia and the eastern states. It had net income of A$908,000 in the six months ended June 30, on sales of A$125.4 million.

Alinta last month bought Australian Gas's energy networks and asset management units, plus a stake in Australian Pipeline Trust, an owner of gas transmission lines. In all, Alinta has about A$5.5 billion of assets on its balance sheet.

``This structure is both sub-optimal and unsustainable,'' Alinta said in the statement, which was lodged with the Australian Stock Exchange.

`Sound' Concept

``We think the fundamental concept of listing AIH was sound, however both the market and our company circumstances have changed substantially,'' Alinta Chief Executive Officer Bob Browning said in the statement. ``It is impractical for AIH to acquire the substantial assets which Alinta now owns given the relative size of those assets to AIH and AIH's yield requirement.''

Alinta plans to fund the offer with a mix of cash and debt and has arranged A$525 million of bridging finance with two banks, the company said. It is planning a further restructuring of the company after the proposed acquisition of Alinta Infrastructure.

``The eventual structure will be designed to deliver better returns for shareholders, provide a stronger platform for growth, and be aligned with the original goal of AIH,'' Browning said in the statement.

The acquisition will relieve Alinta Infrastructure shareholders of the need to pay a second installment of A$1.20 a share for the shares, Alinta said. Shareholders who accept the offer and have paid the second installment will get A$3.26 a share.

The amount to be paid by Alinta for the rest of the stock of Alinta Infrastructure amounts to A$481.8 million based on the A$2.06 offer price for the partly-paid shares, or A$762.5 million based on the A$3.26 price for the fully-paid shares, said Jim Kelly, a spokesman for Alinta in Sydney.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net .