APA raising $750m at $8.50 a share to buy Alinta’s Pilbara assets

afr.com:

Listed gas pipelines owner APA Group has clinched a deal to buy Alinta’s remote power assets in WA’s Pilbara region for about $1.8 billion, and will ask investors for $750 million to bankroll the acquisition at its results today.

APA boss Adam Watson should have a big M&A announcement at results today. Wayne Taylor

The raising was split as a $675 million pro rata institutional placement and a $75 million share purchase plan. It was priced at $8.50 a share or an 8.2 per cent discount to the last close, Street Talk understands.

APA will pay $1.8 billion for the assets, slightly below the previously expected price tag of $2 billion. Its shares were halted shortly after 8am as it prepared the raising.

It comes after Street Talk reported APA Group, advised by Morgan Stanley and Barrenjoey, was in the pole position to buy the assets. The pipelines owner faced competition from Morgan Stanley Infrastructure Partners towards the end, after other tyre kickers had tapped out.

The assets were put up for sale by Alinta’s owner Chow Tai Fook Enterprises via Goldman Sachs earlier this year. Initial deal structure was for the current owner to retain 20 per cent of the assets. However, it quickly morphed into a 100 per cent divestment.

Alinta Energy Pilbara is made up of four main assets: Port Hedland power station (210 megawatts), Newman Power Station and associated battery (238 megawatts and 35 megawatts), the Chichester solar farm (60 megawatts) and Goldfields gas transmission pipeline, which can transport 203 terajoules a day.

It has 900 megawatts worth of renewables and storage products under development, 1 gigawatt of long-term development opportunity and 300 kilometres of planned high voltage transmission lines to add to the 200