APA Group is in talks to buy the heavily debted Basslink Interconnector with help from Macquarie and law firm King & Wood Mallesons, according to The Australian.
APA is in talks with Keppel Infrastructure, owner of the 290km subsea cable between Tasmania and Victoria, with the group confirming the discussions in a statement to the ASX on Monday.
“APA has submitted a confidential, conditional and incomplete proposal to Keppel Infrastructure Trust regarding the potential acquisition,” the statement said.
“While APA is in exclusive discussions, those discussions are ongoing and incomplete and no definitive agreement has been reached between the parties in relation to any transaction.”
Related article: Tasmania’s reached net-zero emissions and 100% renewables – but climate action doesn’t stop there
Rumours of an acquisition have been swirling for weeks, with recent talk in the market that APA was raising equity to fund an acquisition with JPMorgan, Macquarie Group and Goldman Sachs in line to back the deal.
APA owns 15,000km of gas pipelines across Australia and delivers half the nation’s gas. According to reports, it has been eyeing potential acquisitions both here and in the US and is said to have been competing in a number of auctions.
Kohlberg Kravis Roberts, Bain Capital and Oaktree Global Management are also believed to be circling Basslink, ready in the event that the deal with APA falls through.
Basslink is currently in debt to the tune of roughly $635 million, with Keppel Infrastructure required to pay $38.5 million to the Tasmanian government for major outages in 2015.
Basslink’s underwater cable is made from a 12-core fibre-optic telecommunications cable and links the Victorian and Tasmanian electricity grids. It is designed to protect Tasmania against energy shortages and is said to be priced at approximately $1 billion.
