Apa Group · ASX:APA
Apa — Merger or Acquisition (April 2007)
23 slides from Apa's merger presentation, Apr 4, 2007
Slide 1: Acquisition of Origin Energy Networks
APA Group Acquisition of Origin Energy Networks Mick McCormack Managing Director Date: 4 April 2007 - O
Slide 2: Important notice
Important notice This presentation sets out information in relation to the agreed acquisition of the Origin Energy Network by Australian Pipeline Limited as responsible entity for Australian Pipeline Trust and APT Investment Trust (together known as APA) from the Origin Energy Limited (Origin). This
Slide 3: Overview
Overview . Business Model Assets Acquired and Pricing Strategic Rationale ? Asset Description Integration Process ~ Summary Financials and Impact APA Assets as at April 2007 ~ Conclusion
Slide 4: Price of $556.5m plus $15.4m transaction costs (inc. stamp duty)
Price of $556.5m plus $15.4m transaction costs (inc. stamp duty) Increases cash available for. distribution and investment from day.1 Completion targeted for July = No material financial impact.on FY 07 financials Strategic acquisitions in APA’s core business of energy delivery ~all businesses are g
Slide 5: Business Model
Business Model APA Group Securities ca Manager - APA Persormel Controls ‘Operating Expenditwe i Capital expendi Regulatory affsies lt Revenue contracts Km Benefits of low cost siructure returned in full fo unithowers a Gas transmission Ges distribution Electricity transmission i Other complementary
Slide 6: Assets Acquired and Pricing
Assets Acquired and Pricing @ “Total acquisition price $556.5.m plus $15.4 m of transaction costs (inc.- stamp duty): Asset acquired Interest Purchase price Multiple SEA Gas pipeline.| 33.3% stake $133.2m | 14.5x EBITDA (FY07) 1 Envestra securities | 17.2% stake $170.4m | $1.20 per security? 9 OFAM:
Slide 7: Strategic Rationale
Strategic Rationale @ Assets provide long-term stable revenue which will increase cash available for distribution and further investment | Significantly expands APA's footprint and provides growth opportunities, including the development of the east Australian gas transmission grid a - Further enhan
Slide 8: Asset overview
Asset overview @-114-PJp.a. capacity, 680.km pipeline linking Victorian gas fields to South Australia ™ Two compressor stations. and readily expandable @ APA transmission systems now access all major population centres = Commissioned January 2004 and fully contracted -.
Slide 9: Asset overview (cont'd)
Asset overview. (cont'd) m@- Subject to rights for existing: owners. Upon acquisition APA will have pre- emptive rights over the remaining two-thirds. Strategic rationale @ . Opportunity to. develop east Australia gas grid @ Bolts.on to APA’s core transmission business a Leverages off APA existing o
Slide 10: Asset overview
Asset overview @ Major national gas infrastructure service provider: @ 19,100 km of gas distribution networks @ 1,029 km of gas transmission pipelines : oshharabas m- Provides asset management and operations for Envestra a Attractive stable cash flows based on long term contracts on low.risk a LOcaT
Slide 11: Asset overview-cont'd
Asset overview-cont’d m- Employs 500 staff and approximately 700 contractors a. Subject to.consents for assignment of contracts @ Natural gas vehicles, cogeneration, two laterals it
Slide 12: Strategic rationale
Strategic rationale a Continues strategy of increasing internal operating capability. @ Good fit with APA’s existing business and complements APA’s. skill base and technical capability, O&M capability now.in all mainland states and territories @ Primarily operates under long term contracts Continues
Slide 13: Asset overview
Asset overview One of Australia’s largest natural gas distributor Primary assets comprise: —.-49,100km of natural gas. distribution networks | =1,029km of natural gas transmission pipelines Serves more than 980,000 consumers inall eastern and central Australian states Over 95% of revenue is regulate
Slide 14: Strategic rationale
Strategic rationale m Establishes APA as comerstone investor and largest shareholder... tm -OEAM operates ail Envestra assets. m@ Opportunity for board representation mw Diversification of assets by type and location Together. with OEAM, fits APA’s business model of owning and operating its assets.
Slide 15: Integration Process
Integration Process w@~ Detailed integration plan being developed A detailed communication strategy to cover both the.new APA staff from OEAM and APA’s existing staff m Developing and issuing offers of employment to.all OEAM staff. 5 Integration of new staff into APA’s organisational structure @- Ro
Slide 16: Summary financials — Origin Energy Networks
Summary financials — Origin Energy Networks $m Operating cash flow as 43.8 Tax on operating cash flow oe (9.3) Capex Soy . Post tax interest ws : a (29.1) Cashflow available for distribution 5.5 @ The acquisition provides.incremental cash flow available for distribution and investment <9 ee 16
Slide 17: Impact on APA
Impact on APA m@ Noimpact on FY07 results or guidance = Free cash flow accretive from year-1 @ Additional. cash will allow APA to focus on increasing distributions ‘at least in line with CPI and fund growth opportunities 30.0, distribution trom acquisition } Additional cashflow available for 29.0. 2
Slide 18: Impact on APA (cont'd)
Impact on APA (cont'd) Funding “Funded from committed bridge facilities “Gearing, following transaction, within existing debt covenants. Bridge facilities will be refinanced as part of the current syndication process 18
Slide 19: APA's assets as at April 2007
APRs ASSETS AS AT APRIL 200 LEGEND Pipelines: Electricity Transmission Proposed State andl Territory boundary, A LNG Facitity BD Aligae Dietribution Sperm 20 -Envesta Distribution System Eh Gas storage facility Bi 'Gas piocessing techy | power ny station : EF captiatcives, Lciiiincan #. Point of ime
Slide 20: Good fit and fair price
Good fit and fair price Strong free cash flow generation Growth opportunities across the Australian supply chain Fits with APA core and. complementary strategy Provides opportunities to further develop core business and enhances ability. to transmit gas around eastern.Australia gas grid ; oe Substan
Slide 21: We Deliver Energy
_ We Deliver Energy
Slide 22: Accounting Treatment
Accounting Treatment Asset acquired SEA Gas pipeline Interest 33.3% stake Accounting treatment Equity accounted Envestra securities 17.2% stake Distributions treated as income from associates OEAM'& other businesses! 100% ownership Consolidated 22
Slide 23: OEAM complements APA's existing skill base
a OEAM complements APA’s existing skill base Capability Asset management Engineering Commercial Regulatory IT ; Asset development Operations Qid NSW Vic SA WA iS NT APA / OEAM|APA / OEAMIAPA / OEAMJAPA / CEAMJAPA / OFAMIAPA / OEAM|APA / OEAM hot] ot wood volo food Pad ¥ woe gen] oe aa vol“ a wo of ¥