AGL Energy Limited (AGL) and its 50/50 joint venture partner, Arrow Energy Ltd (Arrow), have entered into a sale and purchase agreement with Victorian Funds Management Corporation (VFMC) for the sale of the North Queensland Gas Pipeline (NQGP1) for a total of $205 million2 (AGL share $102.5 million).
This sale follows the purchase by AGL and Arrow of the Enertrade assets in November 2007, and relates to the on-sale of the gas pipeline asset only. AGL and Arrow will retain ownership of the gas processing and compression facility located at Moranbah, which will be integrated into the Moranbah Gas Project joint venture.
As foreshadowed at the time of acquisition, the North Queensland Energy Joint Venture3 gas transportation agreement on the NQGP has been varied to provide additional gas haulage capacity to accommodate future power generation projects and other gas market growth in North Queensland as well as scope for further contract extensions. These extensions would accommodate any future extensions agreed under the terms of the power purchase agreement AGL and Arrow have with the Townsville Power Station (Yabulu).
AGL Managing Director, Michael Fraser said “This sale is consistent with our intentions outlined at the time we acquired this asset. Ownership of the pipeline is non-core to AGL’s integrated strategy and we have achieved a very pleasing sale outcome, especially in light of current market conditions. We also welcome VFMC as a strategic partner in the infrastructure elements of our North Queensland operations.”
VFMC Joint Head of Private Markets, Andrew Elliott said “The NQGP is a perfect addition to our growing portfolio of directly owned core infrastructure assets. We are delighted to be working with partners of the calibre of AGL and Arrow. I am confident that this asset will deliver long term benefits to our clients and our partners.”
Under the terms of the sale, AGL and Arrow will continue to operate the pipeline through a jointly owned company (NQPM4), providing contracted operating and maintenance services to VFMC. The sale will result in a post-tax profit to AGL of approximately $17 million5. Financial close is scheduled for late July 2008 with proceeds to be applied to reduce AGL’s bank debt. The transaction is earnings per share neutral on an ongoing basis.
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1 The NQGP was part of the Enertrade acquisition by the AGL/Arrow JV announced 7 November 2007.
2 Before transaction costs and capital gains tax.
3 The North Queensland Energy Joint Venture is an unincorporated joint venture owned 50/50 by AGL and Arrow.
4 North Queensland Pipeline Management Pty Ltd (NQPM) is owned 50/50 by AGL and Arrow.
5 Net of transaction costs.
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Further enquiries:
Media
Andrew Scannell, Head of Media
Direct: + 61 3 8633 6167
Mobile: + 61 (0) 407 290 658
e-mail: ascannell@agl.com.au
Analysts & Investors
Graeme Thompson, Head of Investor Relations
Direct: + 61 2 9921 2789
Mobile: + 61 (0) 412 020 711
e-mail: gthompson@agl.com.au
About AGL
AGL is one of Australia's leading integrated energy companies. Drawing on 170 years of experience, it includes retail and merchant energy businesses, power generation assets and an upstream gas portfolio. AGL has Australia's largest retail energy and dual fuel customer base. This includes customers supplied with gas and electricity through AGL's joint venture partnership with ActewAGL. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. One of Australia’s largest renewable energy producers, AGL is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.
About VFMC
Victorian Funds Management Corporation (VFMC) is responsible for managing investments of approximately $38 billion for Victorian Government entities. Clients include pension fund ESSSuper Emergency Services & State Super and insurers Transport Accident Commission, Victorian WorkCover Authority and Victorian Managed Insurance Authority.
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