Alinta shareholders back plan to cut debt
CLANCY YEATES
February 23, 2010
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ALINTA Energy shareholders have approved a deal with Babcock & Brown that will cut crippling debts, amid murmurs the company may soon ask investors to stump up cash to restore its balance sheet.
At an extraordinary general meeting yesterday, investors voted in favour of a deal to settle $453 million with B&B by handing over cash, scrip and Alinta's share in a power station.
The meeting also approved an agreement to extend the repayment dates on a $2.7 billion senior debt facility with its 11-member banking syndicate.
The chairman of the former Babcock & Brown satellite, Len Gill, said these were critical steps on the long road to rehabilitation of the debt-laden utility.
Mr Gill also made it clear the company had plenty of work ahead as it set about further cutting its debt, and ultimately, salvaging value for long-suffering shareholders.
The company's total debt of $2.7 billion is nine times earnings of about $300 million - a leverage multiple of about five times is considered reasonable for the sector.
After hiring advisers from UBS and Macquarie last week, Alinta's management is considering various options to cut leverage, including an equity raising, asset sales or a deal with a cornerstone investor.
Although the company has not yet decided on a course of action, a market source yesterday indicated an equity raising could be preferable to asset sales, as it would give shareholders more of a stake in the company's possible recovery.
But after Alinta shares have plunged 98 per cent from their 2007 peak of $3.74, shareholders may be reluctant to stump up extra cash.
Alinta will report its half yearly results on Thursday, capping off a year Mr Gill has described as ''extraordinarily demanding''.
Yesterday the company affirmed its previous guidance of pre-tax earnings of $288 million for this financial year.
Alinta shares closed steady at 8.5.
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