AlintaGas firing up for long-term investment
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Tuesday, 9 July, 2002 - 22:00
THE significance of AlintaGas’ latest announcement on the company’s intended move into electricity retailing will not be lost on either the State Government or Western Power.
Perhaps more significant, however, is that the revelation could also prove a timely investment magnet.
While managing director Bob Browning asserts gas distribution will remain a core part of the AlintaGas portfolio, the company’s plans to build up to 10 co-generation plants, initially with heavyweight Alcoa at Alcoa’s South-West alumina refineries, appears to position AlintaGas well for solid long-term growth beyond sole reliance on gas.
With the net worth of each electricity consumer three times as valuable as a gas customer, an initial 120 megawatt plant planned to be up and running by late-2004, and infrastructure already in place to retail power, AlintaGas has virtually cemented itself as Western Power’s most formidable competitor.
AlintaGas’s reported dialogue with other large industrial customers with substantial power requirements must also be daunting for new market entrants keen on the opportunities full retail contestability appears to promise.
Perhaps of greater pressing need, and more immediate benefit to AlintaGas, is the company’s increased attraction to high-value investors.
In terms of the company’s diversification and growth, the benefits to Alcoa, endorsement of government determination to open up the market, and the ability of two established suppliers to provide attractive energy options to new industry in WA, the AlintaGas move looks to hold plenty of potential investor strength.
Investor considerations are particularly important to AlintaGas at present.
Kansas-based Aquila Inc (formerly UtiliCorp), a major AlintaGas shareholder, said earlier his year it was moving away from the retail side of energy to concentrate on the construction, maintenance and management of electricity networks.
Aquila, with AMP, owns 57 per cent of United Energy.
This focus by United is underscored by its equal share joint venture, established late last year with AlintaGas, in construction and maintenance company National Power Services (WA) Pty Ltd.
The recent sale of Victorian electricity and gas retailer Pulse Energy, 25 per cent owned by United, further facilitated the company’s approach, a United spokesperson said.
The significance of this to AlintaGas is that the United and Aquila joint venture company, WA Gas Holdings Pty Ltd, is a 45 per cent stakeholder of AlintaGas.
A further consideration for AlintaGas is that UtiliCorp NZ Ltd, whose parent company is Aquila, and who is New Zealand company UnitedNetworks Limited’s principal shareholder, announced last month that it was considering selling its interest in UnitedNetworks.
In response, UnitedNetworks commissioned Deutsche Bank to seek non-binding indicative bids for all or part of the company by the middle of this month, with a view to a decision on final binding bids by late August.
AlintaGas decided on a pro-active approach to this in light of Aquila’s asset sell-off strategy, and appointed Sydney-based corporate advisory firm Caliburn Partnership to assist its independent directors in “protecting the interests of all shareholders”.
In light of these events, one can appreciate AlintaGas’s delight, exactly three weeks after the Caliburn commissioning, at being able to reveal its latest hand, the memorandum of understanding with Alcoa.
Perhaps more significant, however, is that the revelation could also prove a timely investment magnet.
While managing director Bob Browning asserts gas distribution will remain a core part of the AlintaGas portfolio, the company’s plans to build up to 10 co-generation plants, initially with heavyweight Alcoa at Alcoa’s South-West alumina refineries, appears to position AlintaGas well for solid long-term growth beyond sole reliance on gas.
With the net worth of each electricity consumer three times as valuable as a gas customer, an initial 120 megawatt plant planned to be up and running by late-2004, and infrastructure already in place to retail power, AlintaGas has virtually cemented itself as Western Power’s most formidable competitor.
AlintaGas’s reported dialogue with other large industrial customers with substantial power requirements must also be daunting for new market entrants keen on the opportunities full retail contestability appears to promise.
Perhaps of greater pressing need, and more immediate benefit to AlintaGas, is the company’s increased attraction to high-value investors.
In terms of the company’s diversification and growth, the benefits to Alcoa, endorsement of government determination to open up the market, and the ability of two established suppliers to provide attractive energy options to new industry in WA, the AlintaGas move looks to hold plenty of potential investor strength.
Investor considerations are particularly important to AlintaGas at present.
Kansas-based Aquila Inc (formerly UtiliCorp), a major AlintaGas shareholder, said earlier his year it was moving away from the retail side of energy to concentrate on the construction, maintenance and management of electricity networks.
Aquila, with AMP, owns 57 per cent of United Energy.
This focus by United is underscored by its equal share joint venture, established late last year with AlintaGas, in construction and maintenance company National Power Services (WA) Pty Ltd.
The recent sale of Victorian electricity and gas retailer Pulse Energy, 25 per cent owned by United, further facilitated the company’s approach, a United spokesperson said.
The significance of this to AlintaGas is that the United and Aquila joint venture company, WA Gas Holdings Pty Ltd, is a 45 per cent stakeholder of AlintaGas.
A further consideration for AlintaGas is that UtiliCorp NZ Ltd, whose parent company is Aquila, and who is New Zealand company UnitedNetworks Limited’s principal shareholder, announced last month that it was considering selling its interest in UnitedNetworks.
In response, UnitedNetworks commissioned Deutsche Bank to seek non-binding indicative bids for all or part of the company by the middle of this month, with a view to a decision on final binding bids by late August.
AlintaGas decided on a pro-active approach to this in light of Aquila’s asset sell-off strategy, and appointed Sydney-based corporate advisory firm Caliburn Partnership to assist its independent directors in “protecting the interests of all shareholders”.
In light of these events, one can appreciate AlintaGas’s delight, exactly three weeks after the Caliburn commissioning, at being able to reveal its latest hand, the memorandum of understanding with Alcoa.