Atco to buy Brookfield Australian assets

Canadian infrastructure group Atco has agreed to acquire a regulated natural gas distribution utility from an Australian subsidiary of Toronto- and New York-listed fund manager Brookfield Infrastructure Partners (BIP).

Atco will acquire 74.1 percent of the utility from BIP, and the remaining 25.9 percent from Sydney-listed energy investor DUET Group. The aggregate price for the acquisition is about A$1 billion (€753.1 million; $1.1 billion), including the assumption of A$644 million in debt, Atco said in a statement.

The transaction is subject to approval by the Australian Foreign Investment Review Board, and is expected to close in the third quarter of 2011, according to the statement.

The natural gas utility, called Western Australia Gas Networks, is one of several assets that BIP acquired as part of its takeover of former Babcock & Brown vehicle Prime Infrastructure. Western Australia Gas Networks forms part of the former Prime subsidiary WestNet Infrastructure, which also holds a natural gas pipeline in Western Australia and other assets.

Last month, DUET said it would increase its stakes in two assets co-owned by WestNet – the Dampier Bunbury natural gas pipeline and Victorian natural gas distributor Multinet Gas – but only if Atco succeeded in its negotiations to acquire WestNet assets.

In a statement to the Australian Securities Exchange last week, DUET said it would acquire a 20 percent interest in the Dampier Bunbury pipeline, bringing its stake in the pipeline to 80 percent, and  acquire a 20.1 percent interest in MultiNet to gain total ownership of the company.

DUET said it would pay a net cost of A$42.5 million for the sale and retirement of debt on Western Australia Gas Networks, as well as for the Dampier Bunbury and MultiNet acquisitions. DUET also made its offer conditional on the sale of another WestNet Infrastructure asset – the Tasmanian Gas Pipeline – to a third party.  

BIP is not expected to receive any proceeds from the sales, according to a spokesperson for the firm.  As part of a 2009 recapitalisation, Prime issued an option to holders of exchangeable preference shares to receive any proceeds from the sales of WestNet Infrastructure assets.  

When BIP completed the Prime merger in 2010, the firm classified the WestNet Infrastructure assets as “held for sale assets with a nil carrying value,” according to BIP’s 2010 annual report.

BIP is part of Brookfield Asset Management, which manages assets of about $150 billion, according to the firm’s website. As part of the Prime takeover, BIP also acquired interests in assets beyond WestNet Infrastructure, including UK ports business PD Ports, the Dalrymple Bay Coal Terminal in Queensland, Australia, and WestNet Rail, a 5,000-kilometre rail network in Western Australia.