PEP to test a connection with Tasmania’s undersea power cable operator

Basslink’s cable-laying ship, the Ile De Re.

Pacific Equity Partners has made the shortlist to buy Basslink, as eager would-be buyers continue to work on the business.

Suitors have been granted an extension of time to weigh up a purchase of the power cable connecting Tasmania and the mainland through due diligence work.

It is understood that PEP is weighing up an acquisition of the business through its Secure Assets Fund and may join forces with a consortium headed by Merrick Howes, a former executive at Anchorage Capital Group.

However, it also may bid alone for the asset.

DataRoom can reveal that Faraday Associates is advising Mr Howes’ Aviron Capital on a tilt for Basslink.

Mr Howes and his backers, along with PEP, are going up against APA Group, which owns Basslink’s debt.

Law firm Gilbert + Tobin is advising both Aviron Capital and APA. PEP recently completed a deal to sell iNova Pharmaceuticals, which 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.

Basslinks’ receiver, FTI Consulting, is running the Basslink process.

Up to three parties have been short-listed.

After the indicative offers were submitted, final bids were originally due on August 15, but the understanding is that date has now been extended, providing time for other suitors to get up to speed.

It is understood that FTI initially received about 10 expressions of interest for Basslink.

Basslink collapsed into receivership in November last year.

It has senior secured debt with a face value of $526m, now held by APA, and its overall debt is understood to be close to $626m.

The undersea cable provides two-way transmission of 500MW of power between Tasmania and the mainland.

It also supplies 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.

Basslink fell into receivership after the Tasmanian government and Hydro Tasmania had claimed $105.3m in damages following an outage of connection with the mainland in 2015.