BBP sets AlintaAGL price high enough to discourage a keen AGL, while justifying the $522 million needed to secure AGL’s one-third stake
Posted by gasweek on 4 October, 2007
AGL and BBP ended up as joint owners of AlintaAGL, formed as a result of the asset swap between Alinta and AGL to resolve their hostile takeover tussle, reported The Australian (25/9/2007, p. 25).
Russian roulette: AlintaAGL consisted of Alinta’s old WA retail network with two co-generation power stations thrown in as well. Under a so-called Russian roulette arrangement, AGL can opt to buy BBP’s 67 per cent stake, at a price set by the Babcock-controlled Alinta. But if AGL declines, BBP must buy AGL’s 33 per cent holding.
AGL challenged: BBP yesterday cocked the revolver and set the price at $1.06 billion, thus valuing the whole AlintaAGL on an enterprise value of $2.088 billion ($1.582 billion equity and $506 million debt). It looks as if BBP has set a price high enough to discourage a keen AGL, while still justifying the $522 million BBP would need to cough up to secure AGL’s one-third stake.
Reference: Criterion with Tim Boreham
The Australian, 25/9/2007, p. 25