APA wins QCLNG pipeline auction

BG’s auction of the 543km Queensland Curtis LNG pipeline has beaten earlier $US4 billion expectations with Australian gas infrastructure player APA Group’s winning bid reaching $5 billion ($A6 billion).

Blair Price

APA aims to raise $A1.84 billion through a fully underwritten entitlement offer while $US4.1 billion is expected to come from its syndicated bank bridge debt facility.

"The acquisition of the QCLNG pipeline further enhances APA's position as Australia's largest owner of gas transmission pipelines and builds on APA's strategy of expanding its revenue base and east coast grid,” APA managing director Mick McCormack said.

The pipeline assets – which also include interconnections with the rival CSG-fuelled, Curtis Island-based Australia Pacific LNG and Gladstone LNG projects and APA’s east coast gas grid – is expected by APA to be “operating cash flow per security accretive” by about 10% from the first full year of ownership.

The binding sales and purchase agreement underpinning the deal is subject to the condition that the first commercial delivery date for the first train of the QCLNG project is achieved by April 30, 2015, with financial close of the deal expected in the June quarter.

Confident that the equity raising will not impact its current credit ratings, APA’s 1 for 3 pro-rats accelerated entitlement offer is priced at $6.60 per new security – a 17.19% discount to the last closing price (yesterday).

“It is understood a number of superannuation funds a have already committed to sub underwriting a large proportion of the offer, signalling a keen appetite for infrastructure assets in a low interest rate environment,”The Australian commented.

BG launched its QCLNG pipeline marketing efforts in June and had aimed to land a deal before Christmas.

The QCLNG project is targeting 8.5 million tonnes per annum of LNG output through two trains with a December start-up announced months ago.

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