D-Day looms for Alinta’s WA power assets auction

afr.com:

It’s down to the short strokes at the auction for Alinta Energy’s remote power assets in Western Australia.

Alinta Energy chief executive Jeff Dimery. Jeremy Piper

Street Talk understands Alinta’s owner, Chow Tai Fook Enterprises, is expected to pick a preferred bidder in the coming fortnight. Sources said APA Group had shimmied into pole position, after squaring off rival suitors for the assets, including Fortescue Metals Group which is understood to have withdrawn months ago.

Sell-side adviser Goldman Sachs and APA’s advisers, Barrenjoey and Morgan Stanley, are working through the final details, sources said on Sunday. The size of APA’s bid was not known, and there is no certainty a deal will be done with the listed pipelines giant. Of note, several offers in the non-binding indicative stage breached the $1.5 billion mark.

The sale process is understood to have been extended beyond the 80 per cent stake in the 550 megawatts of installed capacity and the under-construction 80 megawatts that prospective bidders were told to think about as the base case in the auction’s early marketing.

Should APA sign the deal, it would have its $2.3 billion of liquidity across cash and undrawn debt to finance the purchase. It was not known if it would tap equity capital markets; it last raised $500 million via a rights issue in 2018, while its last M&A play, distressed subsea connector Basslink, was acquired via a debt-for-equity play.

No doubt Barrenjoey’s gun infrastructure team will be feeling the heat to get a signed deal. The investment bank’s client, Suncorp, had its $4.9 million transaction with ANZ kiboshed by the competition regulator last week.

Alinta Energy Pilbara is made up of four main assets: Port Hedland power station