Origin sells Lattice Energy to Beach Energy for $1.6b

Origin sells Lattice Energy to Beach Energy for $1.6b”

Origin said it would sell the Lattice Energy unit to Beach Energy Ltd. (BPT.AU) after ditching earlier plans for an initial public offering, which would have been one of the biggest new listings on the Australian Securities Exchange this year.

"While Lattice Energy was ready to be a successful independent listed entity, the sale to Beach represented the most attractive option to deliver value to Origin shareholders", Origin CEO, Frank Calabria said.

On Wednesday, Australia's government held back from imposing curbs on exports of liquefied natural gas after producers, including Origin, agreed to put more gas into the domestic market to ease energy shortages.

Moreover it also simplifies its business and will also improve shareholder returns.

The Cooper Basin-focused Beach in 2016 completed an all-stock takeover of smaller rival Drillsearch Energy, amid an extended downturn in oil prices.

The acquisition delivers per share reserves, operating cash flow and value accretion.

Origin and Beach have a long history of collaboration through joint ventures and existing gas supply arrangements.

Beach said its largest shareholder, Seven Group Holdings, is "strongly supportive" of the acquisition. Its attributable east coast sales gas and ethane production will increase by about 310 per cent to 95 PJ equivalent from its three core gas processing hubs, and will represent around 15 per cent of the east coast demand, as recorded past year.

Beach's raising involves a 3-for-14 non-renounceable entitlement offer, of which about $233 million is fully underwritten.

Origin said proceeds from the sale of gas its assets, dubbed Lattice Energy, would be used to reduce its adjusted net debt to below A$7 billion ($5.5 billion) by June 30, 2018.

Beach will be advised on the transaction by Credit Suisse and Luminis Partners, with Gilbert + Tobin and Chapman Tripp providing legal advice.

The deal is still subject to approval from the New Zealand Overseas Investment Office and the New Zealand Minister of Energy and Resources.

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