Alinta fires up asset spin-off

ENERGY player Alinta has flagged its intention to spin-off utility infrastructure assets acquired from Duke Energy Corporation last year in an initial public offering worth $868 million to the gas utility.Once listed, Alinta Infrastructure Holdings (AIH) will be worth more than $2 billion and comprise assets including three gas pipelines, with minority stakes in two others, as well as ownership of four power stations.Alinta will remain a 20 per cent shareholder in AIH following the float, anticipated as one of the larger IPOs on the Australian Stock Exchange this year. Another 20 per cent of the capital to be issued will be offered to Alinta shareholders, customers and employees on a priority basis.With an extra $674 million in float proceeds after transaction costs and before taxes, a cashed-up Alinta is expected to continue its aggressive acquisition strategy.Since buying the assets in April last year from US-based Duke for $1.69 billion, Alinta has managed to strip between $25 million and $30 million in costs associated with their operation. Representing the return on the purchase, the transaction is expected to result in a one-off pre-tax profit of at least $150 million in the second half of 2005, dependent on final IPO pricing, Alinta external affairs man-ager Tony Robertson confirmed.It will also jettison approximately $1.14 billion in debt associated with the purchase of the Duke assets, which include the Eastern, Queensland and Tasmanian gas pipelines, minority stakes in the Goldfields and VicHub gas pipelines, ownership of the 160 mega-watt Port Hedland gas-fired power station, the 105MW Mount Newman gas-fired power station, and two other power stations in Victoria and New Zealand.As well as profiting handsomely from the IPO, Alinta will continue to influence AIH through its major shareholding and by becoming the operations and maintenance provider to the group’s assets.While Alinta could not reveal its representation on AIH’s board of directors, it did disclose that John Cahill, Alinta’s chief financial officer, would become AIH’s chief executive.Another option understood to have been considered by Alinta was the full-sale of the Duke assets, rather than the IPO arrangement, in which the gas retailer retains a stake in the infrastructure and a platform for future acquisitions.As financial adviser and underwriter of 80 per cent of the equity in AIH, US broking firm UBS is expected to approach Australian institutional investors to participate in the float, with 20 per cent sub-underwritten by Alinta for retail shareholders, customers and staff. A prospectus for the offer will be lodged with the Australian Securities and Investments Commission later this month.Shares in Alinta traded above $10 last week for the first time since the company floated in 2000.