Infratil says it may post a $33 million loss on the sale of its 80 per cent stake in Perth Energy.
AGL Energy will pay A$55m ($57.6m) in cash for the business, which supplies power and gas to about 2,500 business customers in Western Australia and also operates a 120 MW gas or diesel-fired power station at Kwinana. AGL may pay a further A$14.9m during the next three years subject to financial performance and other terms.
"Infratil's book value for Perth Energy was $89.3m with the result that completion of the sale is currently expected to give rise to a loss on disposal of $33m," the Wellington-based investment company said in statement.
"We are disappointed to realise a loss on sale but pleased with the turnaround in Perth Energy over the last two years," Morrison & Co executive and Perth Energy chairperson Roger Crawford said. "This sale enables the Perth Energy business to continue to grow under AGL's ownership."
The sale is the latest in a string of assets Infratil has let go of to help reduce the complexity of its portfolio and recycle capital out of peripheral investments into faster-growing sectors and geographies.
In the past year it sold its interests NZ Bus, Snapper Services, and student accommodation in Australia and is pouring more cash into renewables and data-related business. Last month it completed the $3.4 billion purchase of Vodafone New Zealand in partnership with Brookfield Asset Management.
Infratil first invested in Perth Energy in 2007. But the firm struggled after the merger of state-owned Verve Energy and Synergy in 2014 changed the shape of the market there. It was caught with high-priced purchase arrangements and a lack of wholesale hedging options and contributed a $14.1m operating loss for the March 2017 year.
Infratil replaced the management and halved that loss in the March 2018 year. Perth contributed underlying operating earnings of $35.9m in the March year just ended.
Infratil is aiming to complete the sale by September 30. It noted that will also release it from its credit support for Perth Energy, which stood at A$64.7m at the end of March.
Infratil shares closed at $4.75 and have gained 39 per cent in the last year.