September 10, 2003 – Australian Pipeline Trust (APA) today completed US$325mm 4(2) Private Placement.
The transaction represents APA’s first raising in the bond markets. 13 investors were
involved in the transaction, through a combination of A$ and US$ tranches. APA raised
money at 7, 10, 12 and 15 years, and was able to achieve a weighted average all-in cost of BBSW+94 bps with an average tenor of 11 years. The proceeds will be used to refinance bank debt.
APA accessed both Australian and US investors, a key funding objective. “We were very pleased to have been able to generate participation from Australian investors as well as the US investor base.” comments Jim McDonald, Managing Director. “APA enjoys a strong credit story and we were very keen to be able to offer exposure to global investors. It was very encouraging to see the breadth and depth of participation in the order book”.
APA was also pleased with the execution process. Michael McCormack, General Manager, Commercial and Technical, says “We were impressed by the level of understanding of our industry. To be able to achieve this level of execution without a physical roadshow was a testament to the marketing effort.”
APA was able to achieve tenors of 7, 10, 12 and 15 years at all-in pricing comparable to its current bank facility.
Comments Graeme Williams, Chief Financial Officer, “The transaction achieved all our
objectives in terms of tenor, size and pricing. We successfully positioned ourselves as a high BBB issuer, and the pricing reflects this. Being able to generate participation from Australian investors in addition to the traditional US investor base was icing on the cake.”
Williams also added, "APA derived great value from separating the execution of the bonds from the cross currency hedging. We enjoyed a very competitive situation on the swap execution with global insurers, trading banks and foreign banks all bidding strongly in a tender for the cross currency swaps. This delivered us real savings".
Citigroup acted as Sole Placement Agent.
Transaction details:
Tranche Size Tenor
Tranche 1 AUD 102mm 7 years
Tranche 2 USD 74mm 10 years
Tranche 3 USD 122mm 12 years
Tranche 4 USD 63mm 15 years
The weighted average cost of funds was BBSW + 94.4 bps.