Gas deal poses questions

WA GAS Holdings’ successful bid for 45 per cent of Alinta Gas valued the gas supplier at $950 million, according to WA Energy Minister Colin Barnett.

WA Gas Holdings, a consortium of Utilicorp United and United Energy, was announced as the cornerstone investor in AlintaGas Limited by Mr Barnett earlier this week.

The consortium offered $319.5 million for the share of the gas utility, beating Wesfarmers and Australian Gas Light.

Mr Barnett said WA would receive net proceeds of $560 million, after debt to the WA Treasury of $360 million was retired.

This means the remaining 55 per cent of AlintaGas is expected to secure $631.5 million.

Either the Government is expecting those shares to sell at a premium or WA Gas Holdings made the steal of the century.

If 45 per cent is worth $319.5 million then the remaining 55 per cent should be worth $390.5 million. On that basis, Alinta Gas is worth only $710 million.

The cornerstone sale to a US-backed consortium means WA has missed the chance of keeping its gas utility in Australian hands.

It also marks the fourth miss for Wesfarmers, which also missed out on capturing WA Airports, SGIO Insurance and Orica.

In one sense, owning AlintaGas would have made sense for Wesfarmers which owns the Kleenheat Gas operation.

The conglomerate has been pushing the Kleenheat brand aggressively into the eastern States.

However, if Wesfarmers’ bid had been successful it could have created a conflict of interest.

It is a major fuel supplier to Western Power, particularly the utility’s Collie coal-fired power station.

WA’s electricity market will offer an opportunity too tempting for the cornerstone owner of AlintaGas to grow its business.

The public offer process for the remaining 55 per cent begins immediately and should be

concluded by mid-October. The shares will not be underwritten.

Mr Barnett said it was estimated 25 per cent of the shares would be held by institutions and the remainder would go to small investors.

United Energy’s Don Bacon said it had been “a delight to be involved with the bidding process and was even better to be the winner”.

“This is a good acquisition for us,” Mr Bacon said.

Both Utilicorp and United Energy have holdings in the Victorian gas and electricity markets.

He said AlintaGas would have to maintain a high level of service pending the total deregulation of WA’s gas market in July 2002.

“We have to maintain the brand,” Mr Bacon said.

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