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Win win result from AlintaGas offer: Minister
13/10/2000 3:25 PM
Energy Minister Colin Barnett said today the investing public and the WA community had emerged the winners from the offer to buy securities in AlintaGas, which is set to list on the Australian Stock Exchange at 11am on Tuesday.
He said the way in which the public offer was heavily oversubscribed by both retail and institutional investors spoke volumes for the process, the company and the State.
“The majority of people who will be AlintaGas shareholders from Tuesday took the opportunity to pre-register to secure their priority allocations and they will receive 450 securities worth about $1,000,” Mr Barnett said.
“Those who made general applications will receive 360 securities.”
Mr Barnett said the gross proceeds from the privatisation of AlintaGas were $971 million.
He said after the repayment of $450 million in State debt the net proceeds would be $522 million.
“The State Government has succeeded in achieving a widely held share ownership,” Mr Barnett said.
“When listed AlintaGas will have 116,000 individual shareholders of which 95 per cent are West Australians. They have taken up 55 per cent of company.
“In addition to the cornerstone investor, Utilicorp/United Energy taking up 45 per cent of the shareholdings 4 2 institutions had access to 19 million shares.
“Of the total public, broker and institutional allocation the WA content is about 76 per cent.
“The allocations will be advertised in the press on Monday October 16 and from Monday successful applicants will be able to check their allocations on the AlintaGas website
and via the AlintaGas offer information line on 13 15 27.”
Mr Barnett said the goal of the AlintaGas IPO was to minimise risk and maximise the chance for public participation, all of which had been achieved.
“AlintaGas will start life as a public company with a strong and diverse share register that includes some of Australia’s largest and most respected investment institutions, together with a broad spread of smaller investors including many AlintaGas customers,” Mr Barnett said.
“The institutional presence is exceptional.
“Any major industrial company would be delighted to have such quality names among its top shareholders and this is a huge endorsement of Western Australian business and AlintaGas by the nation’s leading institutions.
“AlintaGas has also achieved a wide spread of individual investors and clients of stockbrokers, all of whom have been subject to strict allocation limits.
“Unlike other floats where applicants have been subject to a scaling range due to substantial oversubscriptions, in the AlintaGas retail offer all applicants, big and small, have been treated equally.
“The process went to great lengths to ensure small investors were not disadvantaged and many high net worth individuals and organisations who chose to apply for large parcels of securities under the institutional offer missed out.”
Mr Barnett said highlights of the AlintaGas offer process included:
an unprecedented 222,000 Western Australians seized the opportunity to pre register their interest in buying AlintaGas securities;
109,000 people applied for the 44 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;
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 allocation approximately 3,000. The broker allocation ensures a wide spread across their investor client bases;
the 46.7 million securities available to the public was covered over three times by applications, despite the retail offer being closed a week early;
the 19.3 million securities available to institutions was 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 trade sale of 55 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 in AlintaGas.
“Investors will be able to buy and sell AlintaGas securities from Tuesday 17 October when AlintaGas lists on the ASX,” Mr Barnett said.
“Holding statements and refunds due will be despatched by mail no later than Monday 23 October.”
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
SOME KEY POINTS ABOUT ALINTAGAS
The privatisation process was in two parts:
$320m for 72 million securities to the cornerstone investor
$202m for 88 million securities in the retail offer
The 88 million securities in the retail offer was 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
Revenue return to WA of $971 million
$450 million repayment of State debt by AlintaGas.
$202 million for 88 million shares in the public offer.
$319.5 million for 72 million shares sold to the cornerstone investor.
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.
Operates 10,500km gas distribution network.
Supplies gas to 58 per cent of WA homes and 75 per cent of Perth homes.
High quality pipeline assets.
Limited regulatory risk. Next reset 2005.
AlintaGas is sole customer.
Tariff customers generate 90 per cent of $104 million revenue.
Buys gas from producers.
Contracts gas distribution.
Sells gas to customers.
29 per cent of sales to four industrial customers.
Most major contracts expire after 2005.
All customers contestable from 1 July 2002.
Deregulation increases opportunities and competition.
Tariff customers generate 50 per cent of $328 million revenue.
Total Revenue $337.4 million
Gross Profit $153.1 million
EBITDA $96.4 million
Total Sales1999/00 55.0 PJ