Still no deal in bid to rescue energy giant Alinta from administration

Energy giant Alinta Energy remains on the brink of voluntary administration, with the company and its debt holders still trying to decide on a way to solve the company’s $2.8 billion debt woes.

Alinta, which owns 12 power stations around Australia and also operates an electricity retailer in Western Australia, was placed in a trading halt on September 17 as talks with its lenders continued.

The company is exploring a number of to try and reduce its massive debt load.

The first option is to sell the business. The company had asked for received bids to buy its assets and two Middle Eastern groups are believed to have made bids, with the highest valuing the business as about $2 billion, including $1.2 billion in cash for the debt holders.

The second option is a recapitalisation, whereby debt holders would take losses on part of their debts but take equity in the company. This has been proposed by a consortium of private equity firms, led by US private equity giant TPG.

The third option is a debt-for-equity swap, which would see the debt holders become shareholders.

Alinta’s directors – who are reportedly concerned about their fiduciary duty to continue the business as a going concern – have imposed a deadline of today to resolve the issue, or they may be forced to place the company in administration.

However, reports suggest several debt holders – including several US hedge funds and investment managers – are pushing for this self-imposed deadline to be extended as talks over a potential deal continue.

Western Australian Premier Colin Barnett said he wants to see a stronger management and structure in place at the struggling company and added his voice to calls for a speedy resolution of the company’s woes.

“Alinta in a corporate sense has been in somewhat of a state of hiatus for the last two years and I would like to see it resolved,” he told The Australian.