http://www.theaustralian.com.au/bus...particularly-png/story-e6frg9df-1227571709817
Santos executive chairman Peter Coates says the company’s asset sale program is drawing strong interest from strategic buyers over bargain-hunters, particularly for the company’s stake in the Papua New Guinea LNG project.
And while the chairman will not rule out the need for an equity raising to pay down debt after the sales are complete, he says the board is prepared to review its commitment to keeping its investment grade credit rating if being downgraded is seen as better option for shareholders than raising more equity.
Mr Coates said there was strong interest in the broadbased asset sale program, which was announced in August as part of a strategic review to pay down debt. It came with the announcement he was taking a temporary executive position to conduct the review and that managing director David Knox would be retiring.
“We’re seeing a significant number of strategic buyers rather than value buyers,” Mr Coates told media at Gladstone in Queensland, adding there was interest from both types of buyers.
“We will be looking for strategic buyers who see the opportunity to add assets to their portfolio that would not be available at any other time.”
Santos’s (
STO) 13 per cent stake in the ExxonMobil-operated PNG LNG plant, the sale of which some analysts have said may be hampered by project partners’ pre-emptive rights, is attracting a high amount of interest.
“PNG is the jewel in the crown, of course it’s the one everyone is interested in and there is an enormous amount of competition for PNG,” Mr Coates said, adding it would only be sold at a decent price.
“Everything is for sale at the right price, we don’t fall in love with assets, we look after our shareholders.”
Mr Coates was speaking at the launch of the first exports from the Gladstone LNG project, with a shipment leaving for South Korea.
He said the company’s stake in GLNG was not high on the list of potential asset sales.
“A lot of other assets are a lot more suited to this process,” he said, adding “non-strategic” assets were more likely to feature in the sales process.
Interest was coming from a mix of large corporations, smaller players and unlisted entities, he said.
Mr Coates said Santos would determine whether an equity raising was needed after the company knew how much it would get from asset sales.
He declared that the board was not wedded to its current commitment to keep its investment grade credit rating when looking at how much money debt needed to be paid down.
“The investment grade credit rating is something we said we would defend, but it is not an absolute priority for us,” he said.
“In the end we have to make the decision as to what is the best interest of the shareholders and if defending the rating is in the best interest of the shareholders that’s what we’ll do — our position is we will maintain our investment grade credit rating, but in the end, that decision can be looked at again.
Santos has a BBB credit rating with Standard & Poor’s, meaning it can fall one notch to BBB- before it loses investment grade status.
Those that think a CR is still not in the mix....should think again...
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