Colin Barnett

Colin Barnett

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    AlintaGas listing a major corporate success for Western Australia

    17/10/2000 11:04 AM
     
    17/10/00

    Energy Minister Colin Barnett said today the listing of AlintaGas on the Australian Stock Exchange was a very significant corporate success for Western Australia.

    Mr Barnett said the extraordinary show of support for investment in AlintaGas from the public and financial markets spoke volumes for WA’s major gas utility company and our gas industry.

    “AlintaGas is one of the most successful privatisations of a State asset in Australia,” he said.

    “The company starts trading on the ASX with a share register that includes 116,000 individual shareholders, of which 95 per cent are Western Australian and a spread of some of the nation’s largest and most respected investment institutions.

    “The company is well equipped and positioned to continue building its business, to increase the range and level of services provided to customers and to provide returns to shareholders.

    “For the State Government, the privatisation of AlintaGas achieves some very important goals which will bring a range of benefits to WA in future.

    “These include growing the all-important energy sector, deregulating and introducing competition to the gas business, bringing benefits to the key players and customers, and adding value to WA’s industrial base.”

    Mr Barnett said the sales proceeds of $971 million were an excellent result and confirmation of the decision to proceed with a trade sale/IPO privatisation after the repayment of $320 million of AlintaGas debt, net proceeds to the State would be $615.5 million.

    He said the cornerstone sale - which saw 72 million securities or 45 per cent of AlintaGas sold to Utilicorp/United Energy for $319.5 million after 10 companies participated in a bidding process over four months - was highly successful.

    “The IPO then took the level of interest to new highs when the retail offer for 88 million securities in the public pool, broker pool and institutional allocation were all very heavily oversubscribed,” the Minister said.

    “The final result was equitable to all parties, with the public paying $2.25 per security, institutions a 20 cent premium at $2.45 and Utilicorp/United Energy paying $4.38, a premium of 95 per cent to the public price for the strategic position of cornerstone investor.”

    Mr Barnett said gas was the engine room of WA’s economic development, with the State having some 80 per cent of Australia’s gas reserves complemented by world-class gas production, transmission and distribution systems.

    “People investing in AlintaGas recognised its strategic position and ability to capitalise on the opportunity created by national guidelines the State Government is following in opening up the gas market to full competition by July 1, 2002,” he said.

    “By completing the sale just before the gas market being fully opened to competition, the value of the AlintaGas business was maximised to the State and all Western Australians, enabling a properly structured and commercially capable AlintaGas to emerge under private ownership.

    “Investors can expect holding statements and refunds to be despatched by mail no later than Monday October 23.”

    The financial adviser to the State on the offer is Deutsche Bank AG. The joint lead managers to the public offer are Hartley Poynton, Macquarie Equity Capital Markets and Paterson Ord Minnett, with co-managers D J Carmichael, J B Were and CIBC World Markets.

    Media contact: Diana Callander 9222 9699


    BACKGROUND ON THE LISTING OF ALINTAGAS

    TUESDAY 17 OCTOBER 2000
    • In July, following a successful trade sale, Utilicorp/United Energy paid $319.5 million for 72 million shares to become the cornerstone investor in AlintaGas.
    • In August, an unprecedented 222,000 Western Australians seized the opportunity to pre-register their interest in buying AlintaGas securities in the IPO.
    • In September, 109,000 people applied for the 46.7 million securities in the general pool, of whom 83,000 had pre registered and will receive 450 securities, which is 25 per cent more than the 26,000 general applicants who did not pre-register and will receive 360 securities.
    • AlintaGas will have about 116,000 individual shareholders of which 95 per cent are Western Australians. They have taken up 43 per cent of the company. The WA content of the total public, broker and institutional shareholding is about 76 per cent.
    • Western Australian stockbrokers to the issue experienced a huge excess of demand for the 22 million securities they were allocated for their clients. The maximum individual limit for broker firm clients was 10,000 securities and the average approximately 3,000. The broker allocation ensures a wide spread across their investor client bases.
    • The 46.7 million securities available to the public were covered over three times by applications, despite the retail offer being closed a week early.
    • The 19.3 million securities available to institutions were covered seven times at the final institutional price and, after a very selective process, 43 institutions were allocated securities, 14 of them Western Australian.
    • Institutions are paying a final institutional price of $2.45 for stapled securities in AlintaGas, which is a 20 cent premium to the $2.25 per security paid by the general public; and -
    • In the cornerstone sale of 45 per cent of AlintaGas that preceded the retail offer, Utilicorp/United Energy paid $4.38 per security, a premium of 95 per cent to the public price, for the strategic position of cornerstone investor.

    The AlintaGas privatisation process was in two parts:
    $320 million for 72 million securities to the cornerstone investor.
    $202 million for 88 million securities in the retail offer as follows:
    46.7 million securities to the public at $2.25 per share.
    22 million securities to broker firm clients at $2.25 per share.
    19.3 million securities to institutions at $2.45 per share.

    What the parties paid:
    $2.25 by the public.
    $2.45 by institutions.
    $4.38 by the cornerstone investor.

    The securities are correctly called stapled securities, comprising:
    A share valued at $2.125.
    A loan note valued at 12.5c.

    Gross sale proceeds $971m
    $450m debt funds raised by AlintaGas.
    $202m for 88m shares in the public offer.
    $319.5m for 72m shares sold to the cornerstone investor.

    AlintaGas offers
    Dominant market position and brand name.
    Strong, quality core earnings.
    Attractive yield for investors.

    Potential to outperform short-term forecasts.
    Strong, supportive cornerstone investor.
    Cornerstone investor paid 95 per cent premium to public price.

    AlintaGas Networks
    Operates 10,500km gas distribution network.
    Supplies gas to 58 per cent of WA homes/77 per cent of Perth homes.
    High quality pipeline assets.
    Limited regulatory risk. Next reset 2005.
    AlintaGas is sole customer.
    Tariff customers generate a majority of the revenue.

    AlintaGas Sales
    Buys gas from producers.
    Contracts gas distribution.
    Sells gas to customers.
    Most major contracts expire after 2005.
    All customers contestable from July 1, 2002.
    Deregulation increases opportunities and competition.