Alcoa of Australia has agreed to sell its stake in DBP, the owner and operator of the Dampier to Bunbury Natural Gas Pipeline (DBNGP), to DUET Group for $205 million.
Duet will become the sole owner of DBP after acquiring Alcoa’s 20 per cent stake, and plans to undertake a $230 million capital raising to help fund the purchase.
Under the agreement, Alcoa will retain its current access to about 30 per cent of the DBNGP’s transmission capacity for gas supply to its three alumina refineries, located in Kwinana, Wagerup, and Pinjarra.
Alcoa of Australia is 60 per cent owned by US-based Alcoa Inc and 40 per cent owned by ASX-listed Alumina.
“Duet is an experienced energy infrastructure asset owner and together with the DBP management team they are committed to the ongoing success of the pipeline,” Alcoa chairman Michael Parker said in a statement.
Duet chief executive David Bartholomew said acquiring Alcoa’s 20 per cent stake would simplify the group’s structure.
“Entities in the group will own, in aggregate, 100 per cent of four of our five operating businesses,” he said.
“After completion of the acquisition, we will maintain our close relationship with Alcoa, and expect that our management of DBP’s operations, cash flows and capital structure will continue to enhance the value of DBP.”
Duet’s capital raising will comprise a $200 million placement priced at $2.20 per share, representing a 3.5 per cent discount to its closing price yesterday, and a share purchase plan capped at $30 million.
The deal is expected to close early next month.
“Increasingly we see opportunities to generate development opportunities with Duet’s other businesses in remote energy generation and gas/electricity distribution,” he said.
Alcoa was part of a consortium that acquired the pipeline in 2004, and was an initial cornerstone customer of the DBNGP when it partnered with the state government to underwrite the pipeline’s construction in the early 1980s.
Duet and Alcoa shares were unchanged at $2.28 and $12 each respectively, while Alumina shares were 0.2 per cent lower to $1.29 each at 11:15am.