Energy utility Alinta Ltd, which today reported annual results in line with its market guidance, has disclosed that a "small number of parties" were conducting due diligence on the business as part of its potential sale.
Energy utility Alinta Ltd, which today reported annual results in line with its market guidance, has disclosed that a "small number of parties" were conducting due diligence on the business as part of its potential sale.
Alinta said that proposed changes to the business, in the form of a sale or an internal restructuring, were likely to be implemented in the second half of 2007.
Chairman John Akehurst said his understanding was that Macquarie Bank was working with the management buyout group, led by former chairman John Poynton, but declined to name any other parties considering a bid.
Commenting on the board's handling of the MBO proposal, which led to the forced resignation of Mr Poynton and former managing director Bob Browning, Mr Akehurst noted the board's response was "very consistent" with the draft guidelines released recently by the Takeovers Panel.
Regarding the possible internal restructuring, Mr Akehurst said the preferred option was a demerger to create a yield-based company that would own infrastructure assets and a growth-based company that managed the assets. This was judged to be a better option than offeing two different securities in one company.
Alinta posted a net profit of $172.7 million in 2006, down 25 per cent on the 2005 full year figure of $232.2 million.
However, the net profit in 2005 was inflated by several one-off factors, including $137.8 million from the sale of assets into Alinta Infrastructure Holdings, which has since been bought back.
Alinta said profit from underlying operating activities came in at $140 million, up 37 per cent to on the previous full year result of $102 million.
Chairman John Akehurst said a number of expressions of interest were received in relation to the possible sale of Alinta.
"A limited number of interested parties have since been given access to a virtual data room to conduct due diligence on the company," he said.
"Binding bids may then be submitted on completion of this process."
The bidding process for Alinta was sparked after former chief executive Bob Browning and former chairman John Poynton proposed a management buyout of the energy utility, which was revealed in January.
In the same month, Alinta took itself out of the race for Origin Energy Ltd's infrastructure assets in a move to provide certainty for any potential bidders for the company.
Alinta said it was working with its advisers - JP Morgan and Carnegie Wylie - on options for a restructuring the energy utility on a stand alone basis.
Alinta said this would form the base line against which any external bids will be compared.
"We are working hard to finalise our internal valuation of the company," Mr Akehurst said.
"For any external bid to be recommended to shareholders, it will need to offer a suitable premium over this approach."
Alinta declined to provide profit guidance for the current year saying that the structure of the company may be subject to significant change and it was unlikely to report results on a comparable basis.
"The competitive bidding process which the company has embarked upon following the announcement in January 2007 of a possible management buy out may ultimately lead to the sale of the business," Alinta said.
"Given the current status of corporate activity, the directors have chosen not to issue 2007 earnings guidance at present."
Revenue for the year came in at $1.48 billion, an increase of 40.65 per cent on the previous full year result of $1.05 billion.
Alinta raised its total dividends for 2006 by five per cent to 46 cents.
At 1201 AEDT, Alinta shares had dipped 20 cents to $14.25.
