Deals and IPOs

SP Ausnet Plans to Buy Alinta Assets for $6.96 Billion


Australian infrastructure firm SP Ausnet said on Thursday it has agreed with Singapore Power to buy some assets of energy firm Alinta for A$8.142 billion ($6.96 billion).

SP Ausnet, which owns and operates electricity and gas transmission networks in the southern state of Victoria, said the acquisition will be funded by a mixture of debt and equity, including a rights issue to security holders.

SP Ausnet reaffirmed its full year distribution guidance for 2007/2008 and said the acquisition of Alinta assets, which include a gas distribution network in the state of New South Wales and a electricity network in Victoria state, would make it one of the largest infrastructure businesses in Australia.

Alinta, previously Australia's largest energy infrastructure firm, was acquired and carved up by a consortium of investment firm Babcock & Brown and state-owned utility Singapore Power.

"The opportunity to expand our operations outside the geographic boundaries of Victoria, as well as into the area of gas transmission, is something that we have been working on for some time," SP Ausnet Managing Director Nino Ficca said in a statement.

Singapore Power owns 51% of SP Ausnet, which was listed in Australia and Singapore in December 2005.

Analysts have raised concerns about the impact on SP Ausnet's share price and dividends if it bought Alinta assets, given the high price Babcock and Singapore Power paid in their A$8 billion takeover.

The Australian Financial Review newspaper said on Wednesday that SP Ausnet was planning to conduct a A$3 billion rights issue to fund the purchase.

Investment banks UBS AG and Morgan Stanley, which will be managing the rights issue, will underwrite the balance of A$1 billion to fund the transaction, the paper said.

SP Ausnet said the acquisition was subject to security holders' approval. The company plans to hold a meeting with security holders before the end of the year.