Lenders keep 'greedy' Alinta afloat

Former Babcock & Brown utility Alinta Energy Group says its lenders have agreed to extinguish its $3.5 billion of debt in return for ownership of its assets.

The move comes amid accusations by the Western Australia government that the Perth-based Alinta's woes were caused by greed.

Alinta, a gas retailer that also sells electricity, and which was previously known as Babcock & Brown Power, has been scrambling since December to reduce debt to allow it to trade as a going concern.

Alinta on Tuesday announced it would sell its assets to a new company wholly owned by the syndicate lenders as an alternative to accepting a trade bid.

It said trade bids for both the whole of the business and parts of the business were not sufficient to repay the syndicate lenders in full.

WA Premier Colin Barnett said Alinta's WA business was viable but the company had become greedy.

Commentators last year put Babcock and Brown's demise down to greed, saying it had paid too much cash for Alinta to outbid Macquarie Bank and was comfortable with heavy debt levels.

"Alinta itself is a very good business," Mr Barnett said.

"Distributing and selling natural gas through Perth and the southwest is a viable business.

"What we've seen is an element of financial greed in terms of the corporate operation of that company.

"If that's all sorted out and it's perhaps re-floated, that would be a good outcome."

Alinta said further work was required to develop the transaction with lenders to a stage where documents could be executed.

The transaction is subject to credit approvals, court approval and security holder approval.

"We will continue to work with syndicate lenders, including TPG, and our advisers and note there is risk to execution of the transaction," the company said in a statement.

"Directors do not believe that, in the absence of successful de-leveraging transaction, the company can continue to trade as a going concern."

Alinta announced its plan to de-leverage itself (sell down debt) in December last year by restructuring its finance facilities and selling assets.

"Securityholders will be asked to destaple the Alinta Energy Ltd (AEL) shares from the Alinta Energy Trust (AET) units, and an Alinta subsidiary will offer to acquire all securityholders' AET units for 10 cents per unit," Alinta said in a statement.

"Funds to make this acquisition will be a combination of a payment made by the syndicate lenders supplemented by cash currently outside the syndicate lenders' security package, being unencumbered Alinta Group funds.

"Once the AET units are acquired, securityholders will continue to own their AEL shares."

Two power stations financed outside of the company's corporate debt facility, Redbank in New South Wales and Oakey in Queensland, were not included in the deal.

Redbank was effectively worthless and Alinta's 50 per cent stake in Oakey was "currently held for sale for the benefit of Babcock & Brown International Group", Alinta said.

Last month, Alinta sold the Cawse power station and associated infrastructure northwest of Kalgoorlie in WA to Russian nickel miner Norilsk Nickel Cawse Pty Ltd for about $17.5 million.

Shares in Alinta closed 3.3 cents, or 56.9 per cent, higher at 9.1 cents.

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