Marubeni-Led Group to Buy Majority of APA Energy Unit

By Angela Macdonald-Smith

Oct. 29 (Bloomberg) -- A Marubeni Corp.-led group agreed to buy 80.1 percent of an unlisted energy company that will own assets spun off from APA Group, the owner of pipelines that transport more than half of Australia's natural gas.

The company will hold ``low-risk'' assets including electricity transmission cables, power generators and three gas pipelines, Sydney-based APA said today in a statement to the Australian stock exchange. The transaction should yield net proceeds of about A$600 million ($390 million), APA said.

APA, or Australian Pipeline Trust, said in May it will sell majority stakes in some assets to free up funds for expansion opportunities. It said then the restructuring would yield proceeds of as much as A$500 million. Marubeni, Japan's fifth-biggest trading company, will be adding to its existing Australian energy assets that include stakes in power plants in Queensland and New South Wales states.

``The selection of the Marubeni-led consortium is an important step in the transaction and will enable APA to move to finalizing the finance facilities, which are well progressed, and other conditions'' required to complete the deal, Mick McCormack, APA managing director, said in the statement.

APA, whose biggest shareholder is Malaysia's Petroliam Nasional Bhd., rose as much as 4.5 percent to A$2.81 in Sydney trading. The stock was at A$2.75 at 11:09 a.m. local time. The advance compared with a gain of as much as 4.3 percent in the exchange's benchmark index.

APA will use the funds raised from the sale to reduce gearing, or the ratio between debt and debt-plus-equity, to below 70 percent, it said. The transaction should be completed by the end of the year. APA didn't name the other participants in the buying group or give details of the terms of the sale.

The assets to be included in the new company include the Murraylink and Directlink power cables, the Daandine power pant in Queensland, two coal-seam gas processing plants in Queensland, and the Telfer, Bonaparte and Wickham Point gas pipelines, APA said.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net