DAMPIER Bunbury Pipeline (DBP) majority owner Duet Group and aluminium giant Alcoa have finalised the terms of their joint equity investment in the pipeline.
Duet Group raised $396.7 million through an entitlement offer in December, committing at the time to strengthen the pipeline’s credit outlook with funds raised.
Under the terms of the revised investment, Duet Group will invest $144 million in the DBP, with Alcoa group to invest $36 million over about two years – instead of the previously planned three to five years.
The companies had agreed to invest $160 million and $40 million respectively, but Duet said Alcoa’s decision to accelerate its investment enabled the company to reduce its spend – saying the revised investment structure would have a similar credit structure to the earlier deal.
“The $16 million difference between Duet’s previously announced $160 million share of the total investment and the final agreed amount of $144 million will be retained by Duet to fund other investment opportunities as they arise,” the company said in an announcement.
Duet, which holds an 80 per cent stake in DBP, will take a larger share of gas distributions from the pipeline over those two years, lifting to 82.1% of total offtake at its maximum.
The share will reduce gradually as Alcoa spends its share of the costs.
“The invested funds will be applied by DBP to repay external senior debt and, in doing so, is expected to strengthen DBP’s balance sheet and access to global debt capital markets,” Duet said.
DBP is rated BBB- with a negative outlook by Standard & Poor’s, with the agency having said that a senior debt paydown may support its financial metrics.