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Shell NZ Assets Opportunity For Business Improvement - Infratil

Fuseworks Media
Fuseworks Media

Wellington, Nov 17 NZPA - Infratil is emphasising it has no need or intention to raise equity to fund its share of a proposed bid for Shell NZ's energy distribution and refining assets.

Infratil and the NZ Superannuation Fund have formed a consortium, likely to be 50/50, to buy the Shell assets.

At a briefing for its half year results today, Infratil said the proposed transaction was at an advanced stage but still subject to completion risk.

"If completed, the transaction would be attractively priced and result in control of an integrated downstream energy business in a stable market with earnings growth opportunities."

Infratil chief executive Marko Bogoievski referred to concerns from some analysts that Infratil would need to raise equity for its bid.

"Any sort of commentary around having to deal with Energy Developments (in which Infratil has a 32 percent stake), or any other asset for that matter, to get us across the line, it really is inaccurate," Mr Bogoievski said.

There was clear potential to improve the business.

"How we think it is quite a unique asset is that unusual dynamic where you've got an international vendor wanting to exit a market at the same time another international vendor is selling an almost identical set of assets."

Exxon Mobil is putting petrol stations and storage facilities in this country and its NZ Refining Co stake up for sale.

Among the Shell assets Infratil and NZ Superannuation are looking to buy are a 17.1 percent stake in the refinery, a share of the pipeline from the refinery at Marsden Pt to Auckland, and 229 retail sites.

Mr Bogoievski said Infratil thought the stations were in the right places.

"They generate the highest throughput. They have the lowest conversion in terms of getting people to buy convenience retail in the store," he said.

"It's an opportunity to put business improvement through that organisation, and also to optimise, really, an integrated downstream New Zealand energy business."

It was a chance to cut through the complexity that multinational groups had to put up with, Mr Bogoievski said.

He would give a further update when the deal was close to consummation, which he did not expect to be for several weeks.

In its results for the year to the end of September Infratil reported a half year loss of $31.4 million, affected by asset impairment and revaluation of financial instruments.

The company said its operating surplus for the six months to the end of September was $70.4m, compared to $67m a year earlier.

Non-cash charges of $80m were recorded for asset and financial instrument revaluation, partially offset by $26.2m of cash gains on sale of investments, resulting in a net loss of $31.4m, compared to a net surplus of $7.3m a year earlier.

A fully imputed dividend of 2.5c per share is to be paid.

Infratil is expecting its earnings before interest, tax, depreciation, amortisation and financial instruments (ebitdaf) to be between $355m and $370m for the year to the end of next March, compared to $356m a year earlier.

Infratil shares were down 3c to $1.51 around 3pm.

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