FEDERAL Treasurer Josh Frydenberg has confirmed that the Australian government has turned back the bid of the consortium led by CK Asset Holdings Limited in its bod to acquire leading Australian gas pipeline operator APA Group.
Minister Frydenberg last night advised CK of his final decision that its current proposed acquisition of APA Group would be contrary to the national interest, after issuing a previous warning.
“I have formed this view on the basis that it would result in a single foreign company group having sole ownership and control over Australia’s most significant gas transmission business,” the Treasurer said.
“I thank CK Group for the way they have engaged constructively, both before and since my preliminary decision.
“My decision is not an adverse reflection on CK Group or the individual companies. CK Group companies are already a substantial investor in Australia’s gas and electricity sectors and a significant provider of infrastructure services that millions of Australians rely upon. The Australian Government welcomes CK Group’s investments in Australia and its broader contribution to the Australian economy.
“The Government remains committed to welcoming foreign investment into Australia. Foreign investment helps support jobs and rising living standards.
“The foreign investment framework facilitates such investment while giving assurance to the Australian community that the investment is being made in a way that does not compromise Australia’s national interest.”
Following the Treasurer’s announcement, APA Group reconfirmed its FY2019 guidance.
APA said that it expects to deliver earnings before interest, tax and depreciation for FY2019 within the range of $1,550 million to $1,575 million. The company said the guidance takes into account all costs incurred in relation to the CKI Consortium proposal. All other guidance metrics also remain unchanged, including interest costs within the range of $500 million to $510 million and growth capital expenditure expected at around $425 million, based on the current pool of committed projects in FY2019.
“We believe that APA’s business is robust and resilient, and despite being subject to a takeover offer for almost six months, APA has been able to continue to run the business smoothly and today reconfirms the FY2019 guidance metrics as announced in August 2018,” APA’s chairman, Michael Fraser said.
“With the CKI Consortium proposal not proceeding, the way ahead for APA is very clear – we will continue to work on ‘APA’s Plan A’, which is the successful growth strategy that we have employed for almost two decades.”
APA’s managing director, Mick McCormack said $4 billion of future opportunities that the company revealed in August 2018 remain firmly on its radar, and include in excess of $2 billion of Australian gas transportation prospects.
“We continue to see more growth, in the order of $300 to $400 million capital expenditure per annum from FY2020.”