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Duet Group to raise new capital through share offer

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Duet Group says it expects to pay a distribution of 16 cents per security in 2011/12 as it suspends its distribution reinvestment plan while it goes to the market to raise $277 million in new capital.

The energy utilities investor said on Thursday it would offer new shares at a ratio of 1 for 5 at $1.52, compared with Wednesday’s closing price of $1.60.

It would use the funds raised to strengthen its balance sheet as it undertakes a series of acquisitions and disposals to simply its portfolio of assets, Duet said.

Duet also would target three per cent growth annually in distributions over the medium term.

It would suspend its distribution reinvestment plan with respect to its 2010/11 distribution, in an effort to ensure fairness for securityholders as it undertakes the 1-for-5 offer, the company said.

The reinvestment plan would be reinstated in 2011/12.

“The Offer is part of a range of initiatives to enhance security holder value, simplify DUET’s portfolio and further strengthen its capital structure,” Duet chief executive David Bartholomew said in a statement.

“We have acquired an additional 20 per cent interest in Dampier Bunbury Pipeline (DBP) at a discount to RAB, a further 20.1 per cent interest in Multinet, and divested our 25.9 per cent interest in WA Gas Networks.

Following completion of the sale of Duquesne, the DUET Group would hold a portfolio of majority interests in three regulated Australian energy utility businesses – 80 per cent of DBP, 100 per cent of Multinet and 66 per cent of United Energy.

“Our simplified portfolio is expected to deliver predictable and growing distributions to investors, with our FY2012 distribution guidance fully covered by forecast operating cash flows,” Mr Bartholomew said.

“The offer announced today, and our planned capital initiatives, will result in a material degearing of the Group and bring Duet in line with our listed peers,” he said. Our distribution guidance for FY2012 is 16.0 cents per stapled security and we are targeting 3 per cent annual growth in distributions over the medium term.”