OPTrust and Infrastructure Capital Group (the Consortium) advise they have put forward a superior proposal to acquire Pacific Energy Limited (ASX: PEA) via a Scheme of Arrangement for A$1.085 per share in cash (inclusive of a $0.015 per share fully-franked dividend to be paid by Pacific Energy) (Offer).
The Offer, put forward to the Pacific Energy board, values Pacific Energy at $470 million on a fully diluted basis and represents an 11.3% premium to the current offer by QGIF Swan Bidco Pty Ltd – a subsidiary of funds managed or advised by QIC Private Capital Pty Ltd (QIC) – to acquire Pacific Energy for A$0.975 per share (also inclusive of a $0.015 per share dividend). The Offer also represents a 51% premium to the closing price of Pacific Energy shares on 22 July 2019 of $0.720, the last trading day prior to the announcement of the QIC proposal.
OPTrust is one of Canada’s largest pension funds with net assets of more than A$22 billion, including managing a number of energy investments in Australia and globally. Infrastructure Capital Group is an Australian-based specialist infrastructure investment manager with over A$1.8 billion of equity funds under management. More details on OPTrust and Infrastructure Capital Group are provided below.
In addition to the substantial premium and superior value this Offer provides to Pacific Energy shareholders, the Consortium notes that it is no less favourable in any material respect to Pacific Energy or its shareholders relative to the QIC offer, including:
- 100% cash consideration that provides Pacific Energy shareholders with certainty of value and the opportunity to realise the full value of their investment in cash;
- The offer provides the Company with the flexibility to pay a pre-completion special dividend of A$0.065 per share, as announced by the Company on 6 September;
- No financing or due diligence conditions. The conditions included are all procedural conditions that mirror the QIC offer. The Consortium confirms it has received FIRB approval in respect of the Offer.
OPTrust Managing Director Stan Kolenc said the Consortium was attracted to the quality of the Pacific Energy business and saw value in putting forward a superior proposal.
“We have always thought Pacific Energy was a great business and only had this reinforced during numerous site tours, discussions with management, and extensive due diligence we conducted on Pacific Energy prior to the announcement of the QIC proposal. We also see significant opportunities for Pacific Energy that are synergistic with other businesses owned by the Consortium to create significant value,” Mr Kolenc said.
“We have put forward a proposal that we are confident provides substantially superior value to the QIC offer and is clearly in the best interests of all Pacific Energy shareholders, and our members.”
Infrastructure Capital Group Managing Director Tom Laidlaw added: “We look forward to working with the Board of Pacific Energy to complete the transaction. We are excited by the opportunity to further build our Western Australian presence, supported by ICG’s existing Perth office. On behalf of our investors and their members, we have been long term investors in Western Australian generation capacity for nearly 20 years and acquiring Pacific Energy is a continuation of that strategy, bolstering ICG’s position as one of the largest private owners of generation capacity in Western Australia. We look forward to deepening our existing relationships and nurturing new relationships with Pacific Energy’s staff and customers. We believe there are significant opportunities to grow Pacific Energy’s broader energy offerings including through hybrid and renewable power options.”
Azure Capital and King & Wood Mallesons are providing advice to the Consortium.
Background on OPTrust
With net assets of more than A$22 billion, OPTrust is the investor and manager of one of Canada’s largest pension funds – the OPSEU Pension Plan, a defined benefit plan with almost 95,000 members and retirees.
Australia has been a core market for OPTrust, investing over A$700 million since the establishment of its Sydney office in 2012. Over that time, OPTrust’s Australian team has been an active and long-term investor in the local market, focused on building market-leading platforms across a number of sector verticals and supporting value-accretive investment opportunities.
OPTrust is an active investor in Australia’s energy sector, through its majority holding in Melbourne-based electricity retailer Flow Power – a fast-growing C&I energy retailer with operations across Australia. OPTrust is also part of a consortium that has backed the construction and operation of the $450 million Ararat Wind Farm, Australia’s third largest wind farm.
Globally, OPTrust has extensive experience in the energy and resources sectors, most notably with its investment in Kineticor Resource Corp., a Canadian-based power business that develops, owns, and operates power generation facilities delivering energy solutions to projects underpinned by large oil & gas reserves.
In addition, OPTrust – as the majority owner of the Australasian transport platform Kinetic, which operates SkyBus – has supported the expansion of Kinetic through the acquisition of Transit Australia Group in June 2019 to create Australia’s leading bus operator. OPTrust has also invested in businesses with significant Western Australian operations, such as Aviator Group, a provider of specialist helicopter services including at Port Hedland and Argonaut Marine Group, with operations at Port of Dampier.
More information is available at optrust.com.