Australian utility Envestra has announced that APA Group has become its largest shareholder and the new operator of the company's natural gas distribution assets around Australia. This occurred after the sale of Origin Energy's network assets to the APA Group was finalized.
Under the terms of the sale, the APA Group has acquired Origin Energy’s 17.2% interest in Envestra and taken over the operating and management agreements related to Envestra’s gas distribution networks.
As a consequence of the sale process, the parties agreed to various amendments to the agreements, including inserting a term of 20 years, to June 30, 2027.
APA Group also nominated its managing director, Mick McCormack, and its non-executive director, Ross Gersbach, to replace the Origin Energy nominees on Envestra’s board. These appointments take effect from July 2, 2007.
As part of the sale process, Origin Energy has exercised the put option associated with Envestra’s Victorian gas distribution network, also with effect from July 2, 2007. As a result, Vic Gas Distribution and The Albury Gas Company will join the Envestra tax consolidated group and the tax base of the distribution assets will be increased.
The impact on Envestra’s 2007/2008 profit after tax will be about A$150 million by way of a reduction in the deferred tax liability, the company revealed. This will be a non-cash item to be recorded in the 2007/2008 financial results.