Fortescue Metals is understood to be falling away in the contest for Alinta’s Western Australia assets, leaving APA Group in prime position for a $1bn-plus acquisition.
APA and Fortescue were both believed to be in the final round of the competition, yet it is thought that the latter, run by billionaire Andrew Forrest, has fallen away.
There is also speculation that Macquarie Capital is no longer in the race, nor partner I Squared, although one possibility is that its other bidding partner, BP, could still be there, but it is thought to be doubtful.
With final bids for Alinta due in the middle of next month, the acquisition for APA Group could coincide with the release of its full year results on August 23.
Working for APA Group are Barrenjoey and Morgan Stanley, and some believe that APA Group may raise some equity, despite having about $2bn worth of debt to play with.
Sources say Fortescue was initially out of the running after round one, but re-entered when it adjusted its offer.
Alinta’s main customers in the Western Australia mining region are Hancock, BHP and Fortescue.
The offering has been described as highly complex with respect to the contracts.
Alinta is working with investment bank Goldman Sachs on its offer.
Buying the Alinta assets would lift APA’s capability in transmission management, with a network of about 200km of transmission and scope for expansion and acquisition, Macquarie analysts had said earlier.
It is understood that Alinta is selling all of the Port Hedland Power Station and Newman Power Station, which is a gas and distillate power station with a battery storage system.
The latter provides energy via a 220 kilovolt transmission line to the Roy Hill mine site in the Pilbara.
The Port Hedland station has five 42 megawatt gas-fired turbine units, providing electricity to the Pilbara region.
Sources say that the bulk of the offering lies with these two assets.
Some have estimated that the 11.8 per cent stake in the 1380km Goldfields gas pipeline, which transports natural gas from Carnarvon basin producers in the northwest of the state to Kalgoorlie in the Goldfields, is worth between $100m and $200m.
It is also on offer, and APA owns the remainder of the pipeline and has pre-emptive rights to buy Alinta’s interest.
The remote energy grid that is part of the sale would be worth about $50m at best.
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