Ann: Investor Presentation, page-35

Beach, Senex battle it out for Origin’s Lattice Energy

• The AustralianThe contest for Lattice Energy is shaping up to be a shootout between Beach Energy and listed rival Senex, according to sources who are betting that the sale will reap owner Origin Energy about $1 billion in proceeds.

Beach counts Seven Group Holdings as its 20 per cent shareholder. It is said to have been very involved in discussions about a potential acquisition of the business.

It is expected Beach will embark on a $400 million capital raising through adviser Credit Suisse, which may be fully underwritten by Seven.

Senex has private equity firm EIG as a shareholder and it too will no doubt look to raise funds for the deal as it calls on the help of other prospective partners to buy the portfolio of gas assets that Origin Energy has packaged up for sale in an attempt to reduce its debt levels.
Originally, the official plan was to embark on an initial public offering, advised by Macquarie and UBS.

But it was always thought throughout the market that the more likely scenario would be that Lattice Energy would be offloaded in a trade sale.

And if the recent meetings with fund managers were anything to judge by, it appears that will be the case.

Some say that the recent non-deal roadshow presentations were brief and to the point, with little detail about how much Lattice Energy would reap through the sale of contracted gas back to Origin Energy.

Another observation was that there were few — if any — follow-up phone calls from the sales desks of the investment banks pushing for feedback, which many say is a an indication that the vendors may be more focused on a trade sale.

The original price expectations were said to be around $1.5bn for the portfolio, which includes Origin’s Cooper Basin assets, Kupe gas project in New Zealand and its BassGas and Otway projects in Victoria and Tasmania.

But the thinking now is that Origin will sell it for between $1bn and $1.2bn so that it can lock in favourable terms for energy supply from the new owners in a five-year contract set at market prices.

Beach is known to have been acquisitive for some time and even cast its eye over rival AWE as a takeover target in recent months.

Another company under the spotlight in the energy space is Macquarie, Brookfield and Wesfarmers’ $4 billion Quadrant Energy.

While the West Australian oil and gas provider is widely considered an attractive business, the expectation is that it will more likely sell to a trade buyer.

No decision has yet been made to move forward on IPO despite Goldman Sachs and UBS being recently appointed for such a move.

Part of the problem with an IPO for Quadrant is that the owners have invested in the development of gasfields, which some believe the equity market will not value as highly as a trade buyer.

The oil price, which was between $US60 and $US70 when it was bought by Quadrant, will also play a major part on any divestment decisions.

The Australian news.