Fortescue rejoins race for stake in Alinta assets

Alinta’s main customers in the WA mining region are Hancock, BHP and Fortescue.

Fortescue Metals is understood to have been invited back into the final stage of the contest to buy a stake in Alinta Energy’s assets after initially failing to make the cut.

Alinta has shortlisted bidders for a sale of at least 80 per cent of some of its West Australian assets, including its Newman Power Station in the Pilbara that includes a gas and distillate power station with a battery storage system, and its 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.

Other parties that have made the shortlist are Macquarie Group, BP and gas pipeline owner APA Group.

Sources say Fortescue was initially out of the contest, but was told it would make the shortlist if it was prepared to change aspects of its proposal.

Hancock, the private company of billionaire Gina Rinehart, is understood to be out of the competition.

Sources say that should suitors bid what the company has outlined in the information memorandum, the price would be well above $1bn.

But much of the assumptions on future earnings are based on existing customers continuing to buy power from Alinta when they have their own strategy for future power generation.

They could potentially source power at a cheaper price, which means some believe the proposition value is between $500m and $1bn.

Alinta’s main customers in the WA mining region are Hancock, BHP and Fortescue.

The offering was being described as highly complex with respect to the contracts.

Alinta is selling 80 per cent of the assets through Goldman Sachs, but is open to a sale of the assets outright should a buyer come forward at the right price.

The process is happening as further speculation is mounting on the future of Brookfield and EIG’s $15bn acquisition of Origin Energy following the bumper profit forecast out last week by rival AGL Energy.

Should Origin’s profits also soar and its share price rally as a result, it could see the target’s board fail to recommend that Brookfield and EIG’s $9-a-share offer go through, derailing the transaction.

Market experts say that performing particularly strongly for Origin is its Octopus Energy business in the UK.

Shares in Origin on Monday closed up 1c at $8.49.