APA to acquire Alinta Energy’s Pilbara assets for $1.7 billion

Australia’s largest gas infrastructure owner APA Group (ASX: APA) has made a significant move to boost to supper Western Australia’s ‘booming’ mining sector with a $1.7 billion offer to acquire a number of Pilbara region assets from utility Alinta Energy.

Already a leading owner of natural gas transmission assets and a growing suite of renewable energy projects, APA has entered into a share sale agreement to acquire 100% of Alinta Energy Pilbara Holdings and Alinta Energy (Newman Storage).

Vast array of assets being acquired

Alinta Energy’s Pilbara features a number of contracted operational assets fuelled by gas and solar power generation, gas transmission, battery energy storage systems (BESS) and electricity transmission holdings.

It also owns a significant range extensive development pipeline projects including wind, solar, gas reciprocating engines, BESS and associated electricity transmission opportunities.

APA chief executive officer and managing director Adam Watson said the company will undertake a fully underwritten placement to raise $675 million and a non-underwritten Security Purchase Plan (SPP) to raise a further $75 million to partly fund the acquisition.

The remaining capital required for the purchase will be funded by new debt facilities established in connection with the acquisition of $993 million.

Pilbara offers market opportunities

Mr Watson said the acquisition opens the door to support the vast and rapidly growing Pilbara mining region, one of the world’s richest.

He said the inclusion of the Alinta assets will provide APA with a significant growth platform to develop and operate remote-grid energy solutions for Australia’s resources industry.

“The acquisition of Alinta Energy Pilbara delivers APA a significant new growth platform in the attractive remote- grid energy sector. It’s consistent with our strategy to be the partner of choice in delivering infrastructure solutions for the energy transition and links directly with our focus on customers in the resources sector,” APA CEO and Managing Director Adam Watson said.

“The business is underpinned by high-quality assets and a stable base of blue-chip customers operating in one of the world’s leading mining geographies.”

“The acquisition is expected to deliver positive immediate and long-term benefits to security holders and complements our existing assets in Western Australia.”

Builds on proven remote area success

Mr Watson said the Alinta assets will also allow APA to take advantage of its proven skills in operating large-scale gas, renewables and storage infrastructure, while offering an opportunity to benefit from on an increasing requirement for reliable, affordable and lower emissions energy as the resources sector continues to decarbonise.

He noted that Alinta Energy Pilbara has existing long term power purchase agreements (PPAs) with a number of Australia’s most significant resources companies and an attractive pipeline of projects to bring new renewable energy solutions to market.

This includes near-term actionable projects with strong wind and solar resources in highly sought after strategic locations with strong interconnectivity to existing assets.

APA also see the Alinta assets as being complementary to its own strong development and operational capability in key resources areas such as Mount Isa and Gruyere.

The inclusion of Alinta’s 11.8% ownership interest in the Goldfields Gas Pipeline will see APA take its total ownership interest in that key energy asset to 100%.

Positive financial forecasts

Mr Watson APA believes the acquisition can be free cash flow per security accretive in its first full financial year of ownership and value accretive.

“The acquisition is consistent with APA’s strategy to be the partner of choice in delivering infrastructure solutions for the energy transition. The resources industry has been identified as a key target customer group, given the significant forecast demand for low emission infrastructure as companies decarbonise their energy systems.”