agl may sell stake in qgc

AGL possibly looking to sell its $700 million stake in QGC. Any ideas how this may impact on the SP?


$2bn AGL asset sale tipped
Email Print Normal font Large font AdvertisementMarch 18, 2008 - 2:38PM

AGL Energy, Australia's biggest electricity and gas retailer, may sell as much as $2.1 billion of assets to fund the purchase of a NSW state-owned power business, Merrill Lynch says.

The divestments, some of which were flagged by the company last month, may include AGL's stake in Victoria's Loy Yang A coal-fired power plant, worth about $400 million, and its interest in Queensland Gas, worth about $700 million, Merrill said in a March 17 report.

On February 29 AGL said it planned to sell assets to help reduce debt and fund expansion in ''clean'' power generation and natural-gas production. Power assets to be sold by the NSW government are also ''of interest'', managing director Michael Fraser said. He earmarked stakes in oil and gas fields in Papua New Guinea, a business in Chile and an interest in the Enertrade gas pipeline in Queensland for possible sale.

''We expect sales to be announced over coming months, with the Enertrade gas pipelines first off the mark,'' Merrill analysts led by Sydney-based Matthew Spence said in the report. The divestments should not result in cuts to profit estimates, they said.

AGL gained as much as 27 cents, or 2.5%, to $11.20 in Sydney trading, outpacing an increase of as much as 1.2% in the exchange's benchmark utilities index. The stock, which has sunk 29% in the past six months, was at $11.13 at 12:46pm.

AGL's Enertrade asset may be worth about $100 million, while the stake in fields in Papua New Guinea may be worth about $600 million, Merrill said. The Elgas liquefied petroleum gas business and the Gas Valpo business in Chile may each be worth about $150 million, it said.

NSW Premier Morris Iemma said in December that his government would sell the retail licenses of Energy Australia, Integral Energy and Country Energy, while generators Macquarie Generation, Delta Electricity and Eraring Energy would be offered through long-term leases. Labor unions are seeking to stop the move, which JPMorgan Chase estimates may raise as much as $16.4 billion.