Origin Energy to Raise A$2.5 bn via Stake Sale to Reduce Debt

Origin Energy Limited on Wednesday announced it will sell A$2.5 billion ($1.8 billion) in shares at a 34 percent discount.

“In addition to raising A$2.5 billion in capital, we plan to reduce the company’s dividend for FY2016 and FY2017, make further reductions in capital expenditure and sell non-core assets to strengthen Origin’s balance sheet. These initiatives will lower debt, strengthen the balance sheet and reduce reliance on distributions from Australia Pacific LNG,” Origin Chairman Gordon Cairns said.

Origin will also target up to A$800 million in asset sales by FY2017. This will include non- operated upstream interests and direct investments in assets for wind generation and infrastructure assets such as pipelines that require tolling arrangements to be put in place. The company will commence a controlled exit of geothermal and international exploration activities, which may result in a potential write-down of A$100-A$150 million and will result in an additional A$53 million of exploration expense in Vietnam in FY2016.

The company also plans further A$1 billion reduction in capital expenditure and working capital across FY2016 and FY2017. This is a 40 per cent reduction on previous capital expenditure guidance by stopping uncommitted E&P projects and limiting expenditure to joint venture and permit commitments.

“Origin has narrowed its focus to its two core Australian-based businesses – Energy Markets and Integrated Gas,” Origin Managing Director, Grant King said.

King stated that Australia Pacific LNG, which is developing Australia’s largest CSG to LNG project, is on track to produce first LNG in November.

Origin does not expect to make further contributions to Australia Pacific LNG beyond the previously announced A$1.8 billion, which will bring both trains into production in FY2016.