A consortium comprised of Brookfield Renewable Partners (NYSE: BEP,
BEPC; TSX: BEP.UN, BEPC), together with its institutional partners
and global institutional investors GIC and Temasek (“Brookfield”),
and MidOcean Energy (“MidOcean”), an LNG company formed and managed
by EIG, a leading institutional investor in the global energy and
infrastructure sectors, has entered into a Scheme Implementation
Deed with Origin Energy Limited (“Origin” or “the company”) (ASX:
ORG) to acquire 100% of the company’s shares (“Scheme").
The Scheme values Origin at an enterprise value of $18.7
billion1. The purchase price of $8.91 per share represents a 53.4%
premium to the company’s unaffected share price.
The Origin Board has stated that it is unanimously recommending
that Origin shareholders vote in favour of the Scheme in the
absence of a superior proposal, and subject to an independent
expert concluding the Scheme is in the best interests of
shareholders.
Upon closing of the transaction, Brookfield, its institutional
partners and investors will own Origin’s Energy Markets business,
Australia’s largest integrated power generator and energy retailer.
MidOcean will separately own Origin’s Integrated Gas segment
including its upstream gas interests and the 27.5% stake in
Australia Pacific LNG (APLNG). MidOcean has entered into an
agreement to on-sell a 2.49% interest in APLNG to ConocoPhillips.
ConocoPhillips, already a 47.5% owner in APLNG, is the current
downstream operator and intends to take over upstream operatorship
of APLNG.
In addition to its institutional and investor partners,
Brookfield is also working with Reliance Industries as a strategic
partner to assess areas of collaboration in renewable energy in the
context of the transaction.
Brookfield is pursuing this acquisition through the Brookfield
Global Transition Fund I, which is the largest private fund in the
world focused on the transition to net zero. Brookfield Renewable,
which has significant available liquidity, expects to invest up to
US$750 million, which will be funded through a mix of corporate
debt, upfinancings of existing hydro assets and proceeds from asset
recycling initiatives.
EIG is pursuing the acquisition of Origin’s Integrated Gas
business through MidOcean Energy, an LNG company formed and managed
by EIG to create a diversified, ‘pure play’ integrated global LNG
portfolio of high-quality operating LNG projects with strong, long
life cash flows. This acquisition would represent a continuation of
MidOcean’s business strategy and would build upon MidOcean’s
Australian presence, having recently entered into a definitive
agreement with Tokyo Gas to purchase interests in four operating
Australian LNG projects. EIG is among the largest specialist
investors in energy and infrastructure globally and has had an
established presence in Australia since 2000.
Supporting the energy transition in Australia and Asia
Pacific
Brookfield and EIG view Origin as critical to Australia’s energy
transition and energy security. Both parties intend to use the
acquisition to create separate platforms that will assist
Australia’s transition to a net zero future.
Brookfield intends to accelerate the development of renewable
generation capacity for Origin Energy Markets, which is expected to
make a material difference to achieving Australia’s net zero
targets at this crucial time in its energy transition.
The business plan for Origin Energy Markets contemplates at
least $20 billion of additional investment during the next decade
to construct up to 14 GW of new renewable generation and storage
facilities in Australia. This is expected to enable the retirement
of one of Australia’s largest coal-fired power generation plants,
Eraring, and will be undertaken with the highest regard for network
reliability and security.
The proposed investment in new-build renewables for Origin
Energy Markets would represent approximately one-fifth of the new
utility-scale renewable capacity identified by the Australian
Energy Market Operator that is required to be developed across the
National Electricity Market (“NEM”) through to 2030.
In addition to bringing access to necessary capital, Brookfield
has significant expertise in renewable power development, global
relationships with suppliers and a track record of success.
Brookfield is one of the world’s largest owners, operators and
developers of renewable power, with approximately 25 GW of
generating capacity and a 110 GW development pipeline globally. It
has more than 40 years’ experience in scaling large renewable
developments in North America, South America, Europe and Asia
Pacific.
Origin Energy Markets’ existing 3.1 GW fleet of gas-fired
generation and pumped hydro storage provides reliable capacity at
peak periods and at times when renewable generation is
intermittent. This firming capacity is critical to the build out of
scale renewable capacity and will facilitate Australia’s transition
to net zero.
MidOcean recognizes that LNG and natural gas are integral to the
economies of Asia and Australia and is committed to continue
delivering meaningful gas volumes into Australia’s east coast
domestic market in support of local business and households.
APLNG is also critical to the achievement of decarbonization
targets within the Asia-Pacific region. As coal-to-gas switching
accelerates in Asia, APLNG’s status as a major supplier of LNG to
key customers across Asia will play a critical role in helping them
bridge toward a net zero future.
Investment highlights (Energy Markets)
- Market-leading:
Origin Energy Markets is Australia’s largest integrated power
generator and energy retailer with an approximate 24% market share
in the NEM, low customer turnover and industry-leading cost to
serve. The business benefits from a strong management team that is
focused on the transition and is well positioned to respond to
evolving energy markets.
- Scale decarbonization
opportunity: Brookfield intends to accelerate the
build out of significant renewables and storage, enabling the
retirement of Eraring, one of Australia’s largest coal plants, and
reducing reliance on a carbon-intensive grid, reducing absolute
emissions produced by the business by more than 70% by 2030.
- $20 billion investment in
clean energy: Brookfield’s access to capital and renewable
development capabilities will enable investment of at least $20
billion of additional investment during the next decade to build
out up to 14 GW of new renewable generation and storage facilities
resulting in a more cost effective and flexible portfolio of power
generation assets that will benefit Origin’s energy retail
customers.
- Earnings visibility and
stable margins: The regulated price setting regime
together with Origin Energy Markets’ position as the largest and
lowest cost to serve electricity retailer in Australia provides
earnings visibility and stable margins.
- Significant value creation
opportunities: Origin is uniquely positioned to benefit
from the electrification of the Australian economy, providing
customers with an enhanced choice of low-cost services and products
such as an expanded retail and distributed energy offerings and
other decarbonization services, such as electric vehicle chargers,
heat pumps and rooftop solar.
Investment highlights (Integrated Gas)
- Building an attractive
portfolio of world-class assets: APLNG is a tier one,
well-capitalized integrated LNG project that is ideally positioned
to supply key customers in the Asia-Pacific region and across the
globe. Since its inception, the project has seen approximately
US$30 billion of capital investment into high-quality gas reserves
as well as downstream processing and associated infrastructure.
This transaction complements MidOcean’s existing portfolio of
Australian LNG assets recently acquired from Tokyo Gas.
- Enabling the energy
transition: This acquisition fits MidOcean’s belief that
gas and LNG are critical bridge fuels between the energy systems of
today and tomorrow. MidOcean believes that LNG is vital to
achieving global energy transition targets, with coal-to-gas
switching being a key pathway for top regional carbon emitters to
meet both near-and longer-term emissions reduction targets. Natural
gas also enables much deeper renewable penetration in power grids
whilst ensuring grid resilience. This supports the deeper
electrification of economies, which in turn is a crucial element of
any roadmap to net zero.
- Leveraging deep operating
experience: MidOcean’s management team and Board have deep
Australian and global LNG experience. CEO De la Rey Venter is a
25-year industry veteran, and EIG has 20+ years’ experience in the
global LNG sector. MidOcean’s operating experience and credibility,
together with its long-term investment horizon, demonstrate its
commitment to the safe and sustainable operation of these project
interests for the long term.
- High quality long-term
contracts with advantaged position to key customers: The
project primarily sells LNG under long-dated take or pay contracts
to investment grade counterparties in Asia. It operates at globally
competitive breakeven costs and is well positioned to meet growing
LNG demand in the Asia-Pacific region.
Mark Carney, Chair, Brookfield Asset Management and Head of
Transition Investing, said:
“As the energy transition gathers pace, what’s needed is
increasingly clear: faster deployment of large-scale renewables,
the accelerated, responsible retirement of coal generation, and an
interim, supportive role for gas as the dependable back-up fuel.
Brookfield is determined that the new Origin Energy Markets will
lead the way in all respects at this critical moment for the
Australian economy.”
EIG CEO Blair Thomas said:
“LNG will be critical in delivering energy transition targets,
and this transaction is a compelling opportunity to accelerate
EIG’s strategy of gaining exposure to high quality LNG assets
around the globe. We have long been attracted to the Australian
market, with an established presence in Australia since 2000, and
look forward to playing a pivotal role in meeting Australia’s
transition targets by enabling broader decarbonization efforts at
APLNG.”
Brookfield Asia Pacific CEO Stewart Upson said:
“The acquisition of Origin Energy presents Brookfield with a
unique opportunity to invest at least $20 billion and make a
material difference to achieving Australia’s net zero targets. We
will build on the success of our global renewable power and
transition business where we have a mandate to ‘go where the
emissions are’ in putting billions of dollars behind an executable
plan to reduce emissions at Origin. Brookfield has the capital,
expertise, supply chain strength and global track record that’s
needed to transform Origin’s generation fleet to greener sources
and accelerate Australia’s energy transition while ensuring network
security and reliability.”
MidOcean Energy CEO De la Rey Venter said:
“We’re thrilled to join forces with Brookfield and Origin in
this transaction and to further expand our footprint in Australia.
Origin’s Integrated Gas business adds world-class assets to our
portfolio - assets that fit our strategy to create a high quality,
diversified, global ‘pure play’ integrated LNG company. We look
forward to working with all stakeholders to help facilitate
Australia’s energy transition, to bring stable and affordable gas
supply to the domestic market and to provide a reliable supply of
LNG to the region for decades to come.”
Transaction Details
Following further discussions with the Consortium on its revised
proposal announced on February 22, 2023, the consideration mix
has been amended to comprise $5.78 per share and US$2.19 per share
and applies equally to all shareholders.2
Based on an assumed AUD/USD exchange rate of 0.70, this implies
a total consideration of $8.912 per share.3
The total consideration payable will be reduced by any dividends
paid by Origin prior to implementation of the Scheme, including the
interim 16.5 cents per share fully franked dividend paid to
shareholders on March 24, 2023. Any reduction in the amount payable
to shareholders due to the payment of dividends would reduce the
Australian dollar component.
The implied consideration of $8.912 per share corresponds to an
enterprise value of A$18.7 billion4 for Origin and represents
a premium of:
- 53.4% to Origin’s closing price of $5.81 per share on November
9, 2022, being the last trading day prior to the initial proposal
by the Consortium;
- 59.0% to Origin’s one month VWAP of $5.60 per share on November
9, 2022; and
- 54.7% to Origin’s three month VWAP of $5.76 per share on
November 9, 2022.
Shareholders will have the total consideration paid in
Australian dollars, with the US dollar component converted to
Australian dollars based on the prevailing exchange rate at the
time of implementation of the Scheme. Shareholders can elect to
have the US dollar component paid in US dollars.
The total consideration payable to shareholders will vary
subject to currency fluctuations between the date of this
announcement and implementation of the Scheme. The consideration
mix between Australian dollars and US dollars is expected to change
as future US dollar receipts are converted into Australian dollars
at the prevailing foreign exchange rate, and if the Consortium
elects to convert an additional fixed amount of US dollar
consideration to Australian dollars.5
Any conversion from US dollars to Australian dollars would
increase the Australian dollar component and reduce the US dollar
component of the total consideration.
Origin has also agreed with the Consortium that a fully franked
special dividend may be paid to shareholders subject to
satisfaction of certain conditions. Any such special dividend will
be considered by the Board closer to the time, but prior to
implementation, of the Scheme.
A 4.5 cents per month ticking fee, accruing on a daily basis,
will be payable if implementation of the Scheme is delayed beyond
November 30, 2023.
The Scheme is conditional upon the satisfaction of certain
conditions, including:
- Origin shareholders approving the
Scheme at a meeting of shareholders (Scheme Meeting);
- court and regulatory approvals
including the Foreign Investment Review Board (FIRB), the
Australian Competition and Consumer Commission (ACCC), the National
Offshore Petroleum Titles Administrator and certain other foreign
investment approvals;
- the issue of an Independent Expert’s
Report that concludes that the Scheme is in the best interests of
Origin shareholders; and
- customary other conditions,
including that no material adverse change occurs prior to
implementation.
Citi and MUFG acted as financial advisors to Brookfield on the
transaction. UBS and J.P. Morgan acted as financial advisors to
MidOcean on the transaction.
Contact information |
|
|
|
Brookfield Asia Pacific |
Consortium |
Catherine Woods |
Ben Wilson (GRACosway) |
+61 477 320 333 |
+61 407 966 083 |
catherine.woods@brookfield.com |
bwilson@gracosway.com |
|
|
Brookfield Renewable |
|
Media: |
Investors: |
Simon Maine |
Alex Jackson |
+44 7398 909 278 |
+1 416-649-8196 |
simon.maine@brookfield.com |
alexander.jackson@brookfield.com |
|
|
EIG/MidOcean |
|
Kelly Kimberly / Brandon Messina (FGS
Global) |
|
+1 212-687-8080 |
|
EIG@fgsglobal.com |
|
About Brookfield Renewable Brookfield Renewable
operates one of the world’s largest publicly traded platforms for
decarbonization technologies. Our diversified portfolio consists of
hydroelectric, wind, solar, distributed energy and sustainable
technology solutions across five continents. We have approximately
25,400 megawatts of installed capacity and a development pipeline
with approximately 110,000 megawatts of renewable power capacity, 8
million metric tonnes per annum of carbon capture and storage, 2
million tons per annum of recycled materials capacity and 3 million
metric million British thermal units of annual capacity of
renewable natural gas projects.
Brookfield Renewable is the flagship listed renewable power
company of Brookfield Asset Management, a leading global
alternative asset manager with approximately US$800 billion of
assets under management.
For more information on Brookfield Renewable please see our
website and for more information on the transaction see our
presentation here.
About Brookfield Global Transition Fund The
Brookfield Global Transition Fund, co-led by Mark Carney,
Brookfield Chair and Head of Transition Investing, and Connor
Teskey, CEO of Brookfield Renewable, is Brookfield’s inaugural
impact fund focusing on investments that accelerate the global
transition to a net-zero carbon economy, while delivering strong
risk-adjusted returns to investors. Institutional investors
committed US$15 billion, making it the largest fund ever raised to
support the transition to net zero. The Fund targets investment
opportunities relating to reducing greenhouse gas emissions and
energy consumption, as well as increasing low-carbon energy
capacity and supporting sustainable solutions. Consistent with its
dual objectives of earning strong risk-adjusted returns and
generating a measurable positive environmental change, the Fund
will report to investors on both its financial and environmental
impact performance.
About EIG and MidOcean EIG is a leading
institutional investor in the global energy and infrastructure
sectors with $22.7 billion under management as of December 31,
2022. EIG specializes in private investments in energy and
energy-related infrastructure on a global basis. During its 40-year
history, EIG has committed $44.6 billion in 396 projects or
companies in 42 countries on six continents. EIG’s clients include
many of the leading pension plans, insurance companies, endowments,
foundations and sovereign wealth funds in the U.S., Asia and
Europe. EIG is headquartered in Washington, D.C. with offices in
Houston, London, Sydney, Rio de Janeiro, Hong Kong and Seoul.
MidOcean is an LNG company formed and managed by EIG to build a
diversified, resilient, cost and carbon competitive LNG portfolio.
It reflects EIG’s belief in LNG as a critical enabler of the energy
transition and the growing importance of LNG as a geopolitically
strategic energy resource. On October 7, 2022, MidOcean entered
into definitive documentation to acquire a portfolio of interests
in four Australian LNG projects from Tokyo Gas Group for US$2.15
billion, marking the launch of its strategy to create a diversified
‘pure play’ integrated portfolio of high-quality operating LNG
projects. MidOcean is headed by De la Rey Venter, a 25-year
industry veteran who most recently served as Global Head of LNG for
Royal Dutch Shell.
For additional information, please visit EIG’s website at
www.eigpartners.com or MidOcean’s website at
www.midoceanenergy.com
Cautionary Statement Regarding Forward-looking
Statements
Certain information in this press release, including statements
regarding the acquisition of Origin and the intended separation of
Origin Energy Markets (to be owned by a Brookfield-led consortium)
and Integrated Gas segments (to be owned by EIG), the timeline for,
and the anticipated closing of, the transaction, the expected
reduction in Origin Energy Markets’ carbon emissions, including
through the expected early retirement of Eraring, Brookfield’s
expected investment to build out up to 14 GW of new renewable
generation and storage facilities in Australia, constitutes
forward-looking information within the meaning of applicable
securities laws in Canada and the United States, including the
United States Private Securities Litigation Reform Act of 1995. In
some cases, but not necessarily in all cases, forward-looking
information can be identified by the use of forward-looking
terminology such as “plans”, “targets”, “expects” or “does not
expect”, “is expected”, “should”, “an opportunity exists”, “is
positioned”, “estimates”, “intends”, “assumes”, “anticipates” or
“does not anticipate” or “believes”, or variations of such words
and phrases or state that certain actions, events or results “may”,
“could”, “would”, “might”, “will” or “will be taken”, “occur” or
“be achieved”. In addition, any statements that refer to
expectations, projections or other characterizations of future
events or circumstances contain forward-looking information.
Statements containing forward-looking information are not
historical facts but instead represent management’s expectations,
estimates and projections regarding future events. Forward-looking
information is necessarily based on a number of opinions,
assumptions and estimates that, while considered reasonable by us
as of the date of this press release, are subject to known and
unknown risks, uncertainties, assumptions and other factors that
may cause the actual results, level of activity, performance or
achievements to be materially different from those expressed or
implied by such forward-looking information, including but not
limited to the factors described in greater detail in the “Risk
Factors” section of Brookfield Renewable’s current annual report on
Form 20-F and in Brookfield Renewable’s other materials filed with
the SEC and the Canadian securities regulatory authorities from
time to time, available at www.sec.gov and www.sedar.com,
respectively. These factors are not intended to represent a
complete list of the factors that could affect Brookfield
Renewable; however, these factors should be considered carefully.
There can be no assurance that such estimates and assumptions will
prove to be correct. The forward-looking statements contained in
this press release are made as of the date of this press release,
and Brookfield Renewable expressly disclaims any obligation to
update or alter statements containing any forward-looking
information, or the factors or assumptions underlying them, whether
as a result of new information, future events or otherwise, except
as required by law.
Non-solicitation
No securities regulatory authority has either approved or
disapproved of the contents of this communication. This
communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
_______________________
1 Based on 1,728,724,644 diluted shares outstanding and net debt
of $3.3 billion as disclosed in Origin’s 2023 half year report.2
This differs from the Consortium’s proposal of February 22, 2023
which proposed that Origin shareholders would receive 100% AUD
consideration for the first 100,000 shares held. 3 This amount
differs from the $8.90 value contained in Origin’s February 22,
2023 announcement due to certain hedging gains realised subsequent
to that date. 4 Based on 1,728,724,644 diluted shares outstanding
and net debt of $3.3 billion as disclosed in Origin’s 2023 half
year report.5 US$904 million of calendar 2023 receipts from
Australia Pacific LNG have been hedged to Australian dollars at an
average rate of 0.69 and are included in the Australian dollar
component of the total consideration. The Consortium may elect to
convert up to an additional approximately US$600 million included
in the US dollar component of the total consideration to Australian
dollars at a rate of 0.70.
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