Australia's Origin Energy to Sell Contact Energy Stake

Source: Reuters 8/4/2015, Location: Not categorized

Australia's Origin Energy said it will sell its controlling interest in New Zealand electricity generator and retailer Contact Energy and use the proceeds to reduce debt.

Origin said it had an underwritten agreement to sell its 53.09 percent stake through a bookbuild at a fixed price of NZ$4.65 a share, a 7.3 percent discount to Contact's closing price, raising NZ$1.81 billion ($1.19 billion).

'Today's announcement is consistent with Origin's stated intention to continue to take action to reduce operating and capital costs, realign debt across group entities, and where appropriate, divest assets,' Origin Managing Director Grant King said in a statement.

Origin's investment in Contact has been the subject of media speculation because of pressure on its balance sheet from growth projects, including a liquefied natural gas project in Queensland.

Ratings agency Standard and Poor's cut the company's rating to BBB- in April, saying that Origin had not taken action to bolster its balance sheet.

Origin said it would retain upstream production and exploration interests in New Zealand.

Contact, whose shares were placed in a trading halt until the deal is completed, said it would increase its dividend payout and look to list on the Australian stock exchange.

It said it expected to report underlying earnings of about NZ$161 million for the year to June 30 at its annual result in two weeks.

Contact generates about a quarter of New Zealand's electricity from gas, geothermal and hydro stations, and has around 560,000 retail customers, giving it 20 percent share of the market.

In May, the company scrapped plans to invest in overseas projects and instead paid a special dividend of NZ$367 million to shareholders.


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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 


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