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GTL seeks funds

UK company GTL Resources is seeking to raise $US105 million ($A150 million) from Australian investors to support its planned methanol project on the Burrup Peninsula.

Gaining investor support will be critical if the $700 million project is to proceed.

In Perth this week, GTL chairman Peter Middleton said he was not deterred by the collapse earlier this year of a large methanol project planned by Canadian company Methanex.

“I don’t know why they couldn’t reach their hurdle rate [of return] and frankly I don’t care,” he said.

“If they had our project economics they’d be doing it.”

GTL has stated a number of times this year that the project was on the brink of reaching financial close but Mr Middleton is adamant the company is near to a final go-ahead.

“We have no doubt that we can raise the equity,” he said.

Mr Middleton conducted an institutional roadshow in the eastern States last month and is in Perth this week to talk with local investors.

“We will be talking to a number of individuals that have companies that might invest and then, through one of the brokers, its possible we will talk to a few institutions,” he said.

“If we go forward with one of the brokers here, they would do the normal institutional roadshow like we did on the east coast last month.”

Mr Middleton said he was keen to maximise local investment in the project.

“It would be very appropriate if we could raise a significant amount of it here,” he said.

“The people know where the Burrup is, they see it as an important development for the State and they have a better understanding of the energy sector.”

“If there is an appetite here [in Western Australia] that would be very good.”

GTL and its partners in the project, including engineering contractor Lurgi and methanol marketer Vitol, have already agreed to provide about $150 million of equity.

The contributions from Lurgi and Vitol, which has signed a 15-year off-take agreement for the project’s annual one million tonnes production, are subject to the project reaching financial close.

That, in turn, will depend on GTL raising equity from new investors.

Mr Middleton said he was aiming to complete the financing by mid December so that site preparation and construction work could commence in early 2004.

He said investors should take comfort from the support of the four banks that were underwriting $US265 million ($380 million) of debt for the project.

“Everybody who has studied our project has started with a degree of disbelief and they have examined it and examined out and the banks came out and said okay,” Mr Middleton said.

“They said, you asked for 265 (million dollars) and we’ll give you 265.

“What that tells the world is that they tested us to death and it works.”

The four banks are National Australia Bank, Societe Generale, which is also GTL’s financial adviser, West LB and Bank of Scotland.

Mr Middleton said his main focus over the past few months was finalising the voluminous project contracts.

“We are being very cautious. We need to look at every eventuality and ensure all of the contracts are watertight and complementary,” he said.

Mr Middleton said the project was deliberately designed to minimise technology risk.

“It will be Lurgi’s 37th methanol plant.

“We said we don’t want any technology risk. We want the plain vanilla version.”

Once the project is in full production, and assuming a long run methanol price of about $US160 per tonne, the project is expected to generate annual profit of $US45 million.

GTL has secured an infrastructure package from the Federal Government, which plans to spend $35 million on common use infrastructure on the Burrup.

This is on top of $137 million of common-use infrastructure, including port facilities and water supplies on the Burrup, being funded by the Western Australian Government.

 

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