qenos future, page-12

I note andybee, there are several stories available online about the TO offer including this one from the SMH,
I also note the pipeline replacement cost is $2.5 billion which is but a fraction of the $130million bid offer!
APA Group resumes acquisition spree with $130m Ethane Pipeline Income Fund bid

Date
March 7, 2016 - 12:49PM
Angela Macdonald-Smith
Read more: http://www.smh.com.au/business/energy/apa-group-resumes-acquisition-spree-with-130m-ethane-pipeline-income-fund-bid-20160306-gnc38d.html#ixzz42BZghXNC
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APA Group is again seeking to use acquisitions to boost growth.

Acquisitive pipeline owner APA Group has launched a bid to take full ownership of an eastern coast ethane pipeline in a renewal of its drive for external growth after the failure of two deals last year.
The move, which has long been seen as a possibility, sent the shares of Ethane Pipeline Income Fund surging 30 per cent to $1.9125, matching the value of APA's $1.88 cash bid plus the distribution for March already declared by the target.

The fund, which is already managed and owned 6.08 per cent by APA, owns the ethane pipeline that transports the fuel from Moomba in central Australia to Sydney, where it supplies the Botany plastics plant owned by Chinese-controlled Qenos. Its two independent directors are recommending APA's offer, which values the target at $130.3 million.

APA chairman Len Bleasel described APA as the "natural owner" of Ethane Pipeline and said it is best placed to offer full value for securityholders in the fund.

"The addition of the Ethane Pipeline to APA Group's portfolio of assets will extend and further diversify APA Group's investment in related energy infrastructure," Mr Bleasel said.
"It also enables APA Group to expand our footprint into transporting alternate fuels, including potentially liquids in the longer term, enhancing our position as an infrastructure owner in Australia's growing energy markets."

APA was last year thwarted in two external growth opportunities, the takeover of the Iona gas plant where it was outbid by QIC, and the contract to build the Northern Territory government's North East Gas Interconnector pipeline, which was won by rival Jemena. But managing director Mick McCormack has made clear APA's acquisition ambitions are undiminished, with the pipeline owner also eyeing other assets such as AGL Energy's stake in the Diamantina power station at Mt Isa, and pipelines that have been put up for sale by Origin Energy, for example.

Talk arose in the market in 2014 that APA may have an eye on Ethane Pipeline given the potential for the Sydney-based pipeline owner to tap its low cost of capital to add an asset that could generate savings in maintenance and in its dealings with shippers.
APA's Moomba-Sydney natural gas pipeline runs side-by-side with the ethane pipeline.

At the time, uncertainty over future ethane supply for the pipeline clouded its future, but a five year extension of the contract between Qenos and Santos was finally agreed in November 2014. The transportation contract runs until 2030 although can be terminated earlier with 12 months' notice.

In the longer term, APA, which is being advised by Rothschild, said it could potentially use the pipeline to transport liquids from oil fields in the Cooper Basin.

The unconditional offer for Ethane Pipeline represents a premium of almost 28 per cent to the fund's closing price on Friday when taking the offer price by itself, or 30 per cent including the distribution.
It still values the ethane pipeline at a fraction of its $2.5 billion replacement cost.

APA said it may acquire shares in the target on market for up to $1.9125 each via its broker Citigroup until the close of the offer period, providing shareholders with "an immediate option to realise a significant cash premium" on their holding. It will fund the offer through a mix of cash reserves and debt.

The recommendation of the offer by the fund's independent directors Nancy Fox and Rick Coles applies in the absence of a higher bid and is subject to findings by an independent expert.
APA shares dipped as much as 1.6 per cent to $8.35.

Read more: http://www.smh.com.au/business/energy/apa-group-resumes-acquisition-spree-with-130m-ethane-pipeline-income-fund-bid-20160306-gnc38d.html#ixzz42BZYfWqC
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