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Envestra deal a step closer


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Adelaide-based natural gas transmission and distribution company Envestra has taken another key step in finalising its deal for a $2 billion takeover offer from gas pipeline giant APA Group.

Envestra announced its intention last December to process the bid through a scheme of arrangement that included doing mutual confirmatory due diligence, binding confirmations from its financiers and appointment of an independent expert to advise whether the proposed scheme is fair and reasonable and in the best interests of Envestra’s shareholders (excluding APA).

The company delivered those findings today and is now entering into a scheme of implementation (SIA) with APA to acquire 100 per cent of the shares in Envestra it doesn’t already own.

The scheme will now go to a formal vote of Envestra’s shareholder, each of which will receive a proposal booklet in the coming weeks, the company said.

For the Scheme to be proceed it must be  approved by at 75 per cent of the votes cast by shareholders, other than APA.

Major holder Cheung Kong Infrastructure Holdings (Malaysian) Ltd (CKI) holdsA 17.5 per cent interest in Envestra.

CKI has advised Envestra that it does not currently intend to make a public statement regarding its intentions.

APA Chairman Len Bleasel said the deal is in the best interests of both sets of shareholders.

“In particular, APA believes a combination of APA and Envestra will deliver an appropriate return for all shareholders through aligning APA’s existing long term operating agreement with APA’s ownership, portfolio diversity, greater revenue certainty, asset growth and access to debt and equity capital markets to fund Envestra’s capital program over the medium term.”

Envestra is the old South Australian Gas Company (SAGASCO), a state-owned utility that dates backs to the 1860s.

Its original business was the manufacture of gas from coal; that changed when it signed the first natural gas contract in 1966 after the massive Cooper Basin discoveries by SANTOS.

SAGASCO ran distribution, retail and almost every possible aspect of the sector.

In the aftermath of the 1991 State Bank collapse the cash-strapped Bannon Government of 1992 offered its 52 per cent stake in SAGASCO to private investors; that offer was taken up by Boral.

Five years later, in August 1997, the natural gas distribution networks of SAGASCO, Gas Corporation of Queensland (GCQ) and Centre Gas Pty Ltd (in the Northern Territory) were combined into one organisation, named Envestra, and floated on the Australian Securities Exchange (ASX).

Envestra drew its name from the words energy, investment, infrastructure and Australia.

The new company immediately began to gather up other players in the sector.

At the time of listing on the ASX in 1997, Envestra’s distribution networks were valued at $900 million.

In 1999 Envestra acquired a distribution business in Victoria for approximately $1.2 billion.

The purchase increased the Company’s assets to $2.1 billion, increased the distribution networks to about 17,000 kilometres and increased the number of consumers supplied with natural gas to 835,000.

Today the company owns about 23,000km of networks, 1,100km of transmission pipelines and delivers gas to more than 1.14 million consumers.

In 2007, the contract to operate, maintain and expand Envestra’s distribution networks was transferred to APA Asset Management (for further information refer to Operating and Maintenance Agreements).

APA is the former Australian Pipeline Trust which listed on the stock exchange in 2000.

It owns or has an interest in 14,000 km of pipelines and 25,000 km of distribution networks, owns gas storage facilities and a wind farm and transports more than half of the natural gas used in Australia.

APA’s move on to take up the assets and business of Envestra will see further consolidation in the distribution and transmission industry.


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