Former Anchorage Capital exec Merrick Howes advances in Basslink auction

Basslink Repair Vessel Ile De Re in dock at Point Henry. Picture: Alison Wynd

A consortium of investors headed up by the former Anchorage Capital Group executive Merrick Howes is giving the APA Group a run for its money in the Basslink auction.

Given that APA owns Basslink’s debt, most believed an acquisition of the Basslink power cable between Tasmania and the mainland is a slam dunk for the Australian listed pipeline owner APA.

However, it is understood that Mr Howes’ company Aviron Capital has gathered up a large number of investors for its own play, and now the question is whether it will have the will and financial fire power to pay a price higher than Basslink’s debt.

It’s worth remembering a number of lenders have already been burnt financing the asset and may not want to go there again.

In an unusual move, DataRoom understands law firm Gilbert + Tobin is advising both bidders on their attempts to buy Basslink.

Another interesting twist is that there has been some speculation that Pacific Equity Partners could turn up in the mix, bidding through its Secure Assets Fund and is thought to have been at least sniffing around.

PEP this week sold iNova Pharmaceuticals that it owned with The Carlyle Group to TPG Capital for a price valuing the business between $2.2bn and $2.3bn. PEP will remain an owner of up to 20 per cent through another of its funds.

First round offers have been received in the competition on Monday and less than four parties have now been shortlisted.

Most see the contest coming down to a fight between APA and Aviron Capital and its backers.

After the indicative offers are submitted, final bids will be due on August 15.

It is understood that FTI initially received about 10 expressions of interest for Basslink, and it has been quick to put to rest any scepticism that the process favours APA because of the length of time it has had to assess information about the asset already.

Other shortlisted bidders are understood to have been consulted and can comply with the sale time table, which will be extended as necessary, and they have been offered the assistance needed to get up to speed with the asset quickly.

Basslink collapsed into receivership last year and has senior secured debt with a face value of $526m and its overall debt is understood to be close to $626m.

The undersea cable that provides two-way access of 500MW of power between Tasmania and the mainland collapsed into the hands of receivers in November.

This was at a time the Tasmanian government and Hydro Tasmania had claimed damages worth $105.3m from an outage of the power and internet connection with the mainland in 2015. The interconnector comprises physical connection between Tasmania and Victoria for not just power, but internet services.

In addition to smoothing Tasmania’s own power grid, it plays a role in stabilising the National Energy Market when power demand fluctuates in the summer months.

According to a disclosure in October last year to the Singapore exchange, KIT’s Australian subsidiaries had a standstill agreement for its loans that expired in late October 2021.