APA Group, Australia’s largest natural gas infrastructure business, has proposed an A$122 million (€82 million; $90 million) takeover bid for all the securities of Ethane Pipeline Income Fund it does not already own through its wholly owned subsidiary APT Pipelines.
APA Group owns 6.08 percent of the fund’s securities.
Ethane Pipeline Income Fund (EPX) is an investment vehicle that owns the 1,375km Moomba to Sydney Ethane Pipeline. It is externally managed by APA through a management services agreement, with APA also providing operation and maintenance services to the fund.
A deal would allow APA to turn the page on two unsuccessful bids last year. The company was trumped by QIC in its attempt to buy the Iona gas storage in October and lost out to rival Jemena over a contract to build an $800 million pipeline in the Northern Territory in November.
Under the terms of the offer, EPX shareholders will receive A$1.88 cash per EPX security. They will also be entitled to retain the declared EPX distribution of A$0.0325 per share if eligible on the distribution record date.
The offer price represents a premium of 27.9 percent to the 4 March closing price of EPX securities of A$1.47, implying a total equity value of approximately A$130.3 million.
APA will fund the all-cash offer with a mix of existing cash reserves and debt facilities.
The independent directors of EPX have agreed to recommend APA’s offer in the absence of a superior offer and subject to an independent expert opining that the offer is fair and reasonable.
APA Group’s chairman, Len Bleasel, commented that APA is the “natural owner” of EPX and the Moomba to Sydney Ethane Pipeline and said that it is best placed to offer full value to its security holders.
“The addition of the Ethane Pipeline to APA Group’s portfolio of assets will extend and further diversify APA Group’s investment in related energy infrastructure. It also enables APA Group to expand our footprint into transporting alternate fuels, including potentially liquids in the longer term, enhancing our position as an infrastructure owner in Australia’s growing energy markets,” Bleasel added.
Upon the completion of the deal, EPX will join APA Goup’s natural gas pipelines portfolio of over 15,000km, transporting more than half of the natural gas used in Australia annually.
Sydney-headquartered APA Group also holds minority interests in a number of energy infrastructure enterprises including SEA Gas Pipeline, Energy Infrastructure Investments, GDI Allgas Gas Networks and Diamantina and Leichhardt Power Stations.