PROSPECTUS FOR THE ISSUE OF 1,250,000 RESET PREFERENCE SHARES AT $100 EACH TO RAISE $125,000,000

Transcription

1 PROSPECTUS FOR THE ISSUE OF 1,250,000 RESET PREFERENCE SHARES AT $100 EACH TO RAISE $125,000,000 Lead Manager and Underwriter Macquarie Equity Capital Markets Limited Legal Advisers Blake Dawson Waldron

2 Alinta Limited ABN IMPORTANT INFORMATION This Prospectus is dated 13 June 2003 and was lodged with ASIC on that date. Neither ASIC nor ASX takes any responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates. No securities will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. The Company will apply for admission of the RePS to quotation on ASX within seven days after the date of this Prospectus. Conditions precedent to issue No RePS will be issued under this Prospectus unless the conditions precedent set out in Section 1.3 are satisfied on or before the Completion Date. Abbreviations Defined terms and abbreviations used in this Prospectus are explained in the Terms of Issue in Appendix A and the glossary of terms in Appendix B. Important document It is important that you carefully read this Prospectus in its entirety before deciding to invest in the Company, particularly the risk factors set out in Section 6 that could affect the financial performance of the Company. You should carefully consider these factors in light of your personal circumstances (including financial and taxation issues) and seek professional advice from your stockbroker, accountant, lawyer or other professional adviser before deciding whether to invest. Restrictions on the distribution of this Prospectus This Prospectus does not constitute an offer of RePS in any place in which, or to any person to whom, it would not be lawful to do so. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and any person into whose possession this Prospectus comes (including nominees, trustees or custodians) should seek advice on and observe those restrictions. No action has been taken to register RePS or this Prospectus or otherwise permit a public offering of RePS in any jurisdiction outside Australia. The RePS have not been, and will not be, registered under the US Securities Act 1993 (as amended) and may not be offered or sold in the United States or to, or for the account of or benefit of, US persons. Accordingly, neither this Prospectus nor the Application Form may be sent to investors in the United States or otherwise distributed in the United States. Electronic Prospectus This Prospectus is available in a paper version and in electronic form. The electronic form can be found at the Company s website at from the beginning of the Exposure Period (referred to below) until the Closing Date. The Application Form will be made available in electronic form after the expiration of the Exposure Period. The Offer constituted by this Prospectus in electronic form is available only to persons receiving this Prospectus in electronic form within Australia. If you wish to apply for RePS, you may either: complete and return an Application Form which is attached to or accompanies a paper copy of this Prospectus; or print a copy of the Application Form (which is attached to or accompanies the electronic form of this Prospectus) from and complete and return it. If you view an electronic copy of this Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please contact the Alinta RePS Information Line on telephone Section 2 contains further details on how to apply for RePS. Photographs Photographs used throughout this Prospectus do not necessarily depict assets of the Company. YOU SHOULD READ THE WHOLE OF THIS PROSPECTUS CAREFULLY. IF YOU ARE UNCLEAR IN RELATION TO ANY MATTER OR UNCERTAIN IF REPS ARE A SUITABLE INVESTMENT FOR YOU, YOU SHOULD CONSULT YOUR STOCKBROKER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ADVISER.

3 Contents SUMMARY OF KEY DATES 2 CHAIRMAN, S LETTER 3 1. OFFER SUMMARY 4 2. DETAILS OF THE OFFER 6 3. ANSWERS TO KEY QUESTIONS ALINTA - EXISTING AND PROPOSED OPERATIONS EFFECT OF THE OFFER ON ALINTA RISKS ASSOCIATED WITH INVESTING IN REPS TAXATION REPORT ADDITIONAL INFORMATION 45 APPENDIX A: TERMS OF RESET PREFERENCE SHARES 63 APPENDIX B: GLOSSARY 75 APPLICATION FORM 81 1

4 Summary of Key dates Announcement of the Offer 13 June 2003 Priority Record Date 20 June 2003 Offer opens 26 June 2003 UEL Scheme Meeting 10 July 2003 Shareholder meeting to approve the Offer 15 July 2003 Offer closes (Closing Date) 16 July 2003 Issue of RePS (Allotment Date) 23 July 2003 Completion Date 23 July 2003 Commencement of trading on ASX on a deferred settlement basis 24 July 2003 Holding statements despatched 25 July 2003 Commencement of trading on ASX on a normal settlement basis 28 July 2003 First Dividend Payment Date 31 March 2004 First Reset Date 30 September 2006 These dates are indicative only and are subject to change. No Application for RePS under this Prospectus will be accepted (and no RePS will be issued under this Prospectus) until the period of seven days after the lodgement of this Prospectus with ASIC has ended. ASIC may extend that period to not more than 14 days by notice in writing to the Company. This period is known as the Exposure Period. The Company may, with the consent of the Lead Manager, vary the dates and times of the Offer (including closing the Offer early) without notice. Accordingly, investors are encouraged to submit their Applications as early as possible. Disclaimer No person is authorised to give any information or make any representation in connection with the Offer which is not contained in this Prospectus. Any information or representation not contained in this Prospectus may not be relied upon as having been authorised by Alinta Limited in connection with the Offer. Except as required by law and only to the extent so required, neither Alinta Limited nor any other person warrants the future performance of Alinta Limited or any return on any investment made pursuant to this Prospectus. 2

5 Chairman s Letter 13 June 2003 Dear Investor On behalf of the Board of Alinta, I am pleased to offer you this opportunity to invest in Alinta through an issue of Reset Preference Shares (RePS). Alinta is seeking to raise $125 million under this Prospectus through the issue of 1,250,000 RePS at $100 per RePS (Offer). The minimum Application for each investor is $2,500 (25 RePS). Alinta Shareholders (as at the Priority Record Date) and employees will receive priority over general applicants in the allocation of RePS. The RePS will offer an attractive fully franked dividend yield. The Dividend Rate will be fixed at the higher of 5.35% per annum and 0.85% above the three year Swap Rate prevailing on the Allotment Date, until the First Reset Date on 30 September The Dividend will be preferred but non-cumulative. The RePS can be converted into Ordinary Shares in certain circumstances and will participate in any increases in the Alinta Ordinary Share price above $6.75, subject to the Terms of Issue. The Offer will diversify Alinta s funding base and achieve a more efficient capital structure. It will also broaden the range of investment alternatives available for investors in Alinta. The Offer forms part of a series of transactions announced by Alinta on 23 April 2003 (Transactions) which will result in Alinta emerging as an operator, manager and part owner of approximately $4 billion in regulated energy assets. The Transactions will increase the scale and scope of Alinta s business and provide geographic, commodity and regulatory diversity of Alinta s assets. As part of the Transactions, Alinta and AMP Henderson will seek to acquire the 43% of United Energy Limited (UEL) shares held by the public through a scheme of arrangement (UEL Scheme). The UEL Scheme is subject to both UEL shareholder and Court approval. The proceeds from the Offer will be used to partially fund the acquisition of the Non-Distribution Assets of UEL. Shareholders will recently have received a Notice of Meeting and Information Memorandum in relation to a general meeting of the Company to be held on 15 July 2003 (General Meeting). At the General Meeting, Alinta will seek Shareholder approval to enable the Offer to proceed. The Offer is conditional on Alinta Shareholder approval and on UEL shareholders and the Court approving the UEL Scheme, as well as other conditions precedent set out in Section 1.3. This Prospectus contains details of the Offer, the terms of the RePS and a description of the risks associated with an investment in the RePS. Please read it carefully before deciding whether to invest. If there is any matter on which you require further information or if you are uncertain as to whether RePS are a suitable investment for your purposes, you should consult your stockbroker, accountant, lawyer or other professional adviser. On behalf of the Board, I commend this investment opportunity to you. Yours faithfully Tony Howarth AO Chairman 3

6 1. OFFER SUMMARY 1.1 The Offer The Offer comprises 1,250,000 RePS at a price of $100 per RePS to raise $125,000,000 (before costs of the Offer). In the event of unsatisfied Shareholder demand, Alinta retains the discretion to issue a further 50,000 RePS ($5,000,000) in oversubscriptions. Alinta will only issue the oversubscriptions if demand for RePS is such that Shareholders applying for RePS are not able to be allocated the minimum Application number, being 25 RePS each ($2,500). The Offer is underwritten to $125 million by Macquarie. Refer to Section 8.7 for a summary of the Underwriting Agreement. 1.2 Use of Proceeds The proceeds from the issue of RePS will be used to partially fund the acquisition of the non-distribution assets of UEL (Non-Distribution Assets) which include: (a) all of the shares in WA Gas Holdings Pty Ltd (WAGH), which holds 36,000,000 Ordinary Shares in Alinta; (b) all of the shares in National Power Services Pty Ltd (NPS), a maintenance and construction business; (c) 66.3% of the shares in Uecomm Limited (Uecomm), a listed telecommunication carrier; and (d) the shareholder loans made by UEL to Uecomm. The balance of the acquisition price payable for the Non-Distribution Assets will be funded by a combination of cash and a drawdown of bank facilities. Details of the Non-Distribution Assets and the acquisition are described in more detail in Sections 4.4 and Conditions Precedent to the Offer The Offer is subject to: (a) the passing of resolutions by Alinta Shareholders at the General Meeting to authorise the issue of RePS; (b) the UEL Scheme being approved by UEL shareholders and the Victorian Supreme Court (Court); and (c) Alinta being reasonably satisfied that the conditions precedent to Completion have been or will be satisfied or waived (see Section 8.8(a) for a summary of those conditions). If all of the conditions are not satisfied by the Completion Date, no RePS will be issued under this Prospectus and Alinta will return all Application Monies as soon as practicable without interest. If the Offer does not proceed, and conditions (b) and (c) above are satisfied, Alinta will still be obliged to complete the Transactions. If the proposed selective buy-back of Ordinary Shares in Alinta held by WAGH (Buy-Back) is not approved by Alinta Shareholders at the General Meeting, the Directors reserve the right to withdraw the Offer. 1.4 Summary Terms of RePS Set out below is a summary of the Terms of Issue of the RePS. This information is a summary only, and should be read in conjunction with other information contained in this Prospectus. A question and answer summary is provided in Section 3 and the Terms of Issue are set out in full in Appendix A. Issuer Alinta Limited. Security Reset Preference Shares (RePS). Issue Size An underwritten issue of $125 million of RePS (with the ability to accept $5,000,000 in oversubscriptions if the demand for RePS is such that Shareholders applying for RePS are not able to be allocated the minimum Application number, being 25 RePS each ($2,500)). Issue Price Each RePS will have a Face Value of $100. 4

7 Dividend Rate Dividend Payment Franking Reset Dates Holder Exchange Exchange Company Exchange Conversion Ratio Conversion Discount Ranking Participation Voting Rights Listing A preferential non-cumulative fully franked Dividend fixed for the period to 30 September 2006 at the higher of: 5.35% per annum; and 0.85% above the three year Swap Rate prevailing on the Allotment Date. The Dividend Rate may be increased or decreased on Reset Dates. Semi-annually in arrears payable on 31 March and 30 September of each year, with the first Dividend payable on 31 March 2004 (for the period from the Allotment Date until that date). Payment of Dividends is subject to: the Directors in their discretion declaring, or otherwise resolving, to pay a Dividend; and there being no legal impediment to Alinta s payment of the Dividend. It is expected that Dividends will be fully franked. If a Dividend is not fully franked, the Dividend will be increased to compensate for any unfranked amount. The Dividend Rate will be adjusted for any change in the Australian corporate tax rate from 30%. The First Reset Date will be 30 September At this date, the Dividend Rate and certain other terms of RePS (including the Dividend payment frequency, Conversion Discount, next Reset Date and Minimum Conversion Number) may be reset by Alinta for the period until the next Reset Date. Holders may request Exchange of their RePS in certain circumstances, including: on Reset Dates; on the occurrence of certain Trigger Events including the non-payment of a Dividend, and a takeover offer; and at any time from the Allotment Date, in which case the Holder would receive only the Minimum Conversion Number of Ordinary Shares. Subject to the Terms of Issue, where Holders elect to Exchange, Alinta will, and at its option, elect to: convert the RePS into a number of Ordinary Shares in accordance with the Conversion Ratio; or arrange a third party to acquire the RePS from the Holder and deliver to the Holder cash or a combination of cash and Ordinary Shares generally equal to the value of Ordinary Shares that would have been received had Conversion occurred. Subject to the Terms of Issue, Alinta may Exchange the RePS in certain circumstances, including: on Reset Dates; if there is a change in taxation or other regulations which affect the RePS; if the aggregate of the Face Value of RePS on issue falls below $25 million; if a takeover or scheme of arrangement occurs; or at any time from six months prior to the next Reset Date, if the VWAP exceeds Face Value x 140%, for 20 consecutive Business Days. Minimum Conversion Number Where Alinta elects to Exchange the RePS, it must convert the RePS into Ordinary Shares in accordance with the Conversion Ratio. If the RePS are converted, each RePS will convert into a number of Ordinary Shares calculated with reference to the average of the daily volume weighted average sale price of Ordinary Shares traded on ASX during the 20 Business Days immediately preceding the Exchange Date. This calculation is subject to the Conversion Discount. The number of Ordinary Shares arising from Conversion will not be less than (the Minimum Conversion Number). This provides participation in increases in Alinta s Ordinary Share price above $6.75, subject to the Terms of Issue. The Conversion Discount will be 2.5% and may be varied on Reset Dates. Dividends on the RePS will be paid in priority to any dividends declared on Ordinary Shares. In a winding-up of Alinta, the RePS will rank for repayment of capital behind all creditors of Alinta but ahead of Ordinary Shares for a return of capital (equal to the Face Value) and for the payment of any accrued Dividend due and unpaid at that time. Alinta reserves the right to issue additional RePS, or other preference shares ranking equally with the RePS. Prior to Conversion of RePS, unless the Directors otherwise determine in their discretion, Holders do not have a right to participate in issues of securities to, or capital reconstructions affecting, holders of Ordinary Shares. However, the Minimum Conversion Number will be adjusted for rights issues, off-market buy-backs, capital distributions, bonus issues and capital reconstructions of Ordinary Shares. Holders have the right to receive notices and attend Alinta general meetings but do not have a right to vote, except in limited circumstances. Application will be made to ASX for the RePS to be admitted to quotation. 1 5

8 2. DETAILS OF THE OFFER `2.1 Structure of the Offer (a) Issue and Allocation Policy Alinta intends to issue the RePS under the Offer on the Allotment Date subject to satisfaction of the conditions precedent described in Section 1.3. The Lead Manager has the right, in consultation with Alinta, to nominate the persons to whom the RePS will be allocated, subject to the priority allocation for Alinta Shareholders (as at the Priority Record Date) and employees. The Lead Manager s right permits it to grant firm allocations to Brokers, institutional investors and private clients of the Lead Manager. Brokers may in turn grant firm allocations to their own private clients. The Offer comprises 1,250,000 RePS (to raise $125,000,000). If demand for RePS exceeds 1,250,000 RePS, Alinta, in consultation with the Lead Manager, will consider accepting oversubscriptions for up to 50,000 RePS or scaling back Applications, or both. Alinta will only accept oversubscriptions if the demand for RePS is such that Shareholders applying for RePS are not able to be allocated the minimum Application number, being 25 RePS each ($2,500). Alinta and the Lead Manager reserve the right to: reject any Application; and allocate any applicant a lesser number of RePS than that applied for, including less than the minimum Application of 25 RePS ($2,500). (b) Alinta Shareholders and Employees If there is excess demand for RePS, Shareholders (as at the Priority Record Date) who submit a yellow Shareholder Priority Application Form will be given a priority over general public applicants who do not have a firm allocation from the Lead Manager or a Broker. Priority will also be given to Alinta employees over general public applicants. (c) Refunds If an Application is not accepted, or is accepted in part only, the relevant part of the Application Monies will be refunded without interest to the applicant as soon as practicable after the Closing Date. (d) ASX Listing The Company will apply for admission of the RePS to quotation on ASX within seven days after the date of this Prospectus. If the RePS are not admitted to quotation by ASX within three months after the date of this Prospectus, no RePS will be issued and all Applications Monies will be refunded without interest. (e) ASX Deferred Settlement Trading It is expected that the trading of the RePS on ASX will commence on a deferred settlement basis on 24 July 2003, and will continue on that basis until and including 25 July Alinta expects holding statements to be despatched on 25 July 2003, which will set out the number of RePS issued to each successful applicant. It is expected that trading of RePS will commence on 28 July 2003 on a normal settlement basis. It is the responsibility of each applicant to confirm their holding prior to trading in the RePS. Applicants who sell RePS before they receive their holding statements will do so at their own risk. 6

9 2.2 How to Invest (a) When to Apply The Offer is expected to close at 5.00pm (Perth time) on 16 July Applications must be received by the Registry no later than 5.00pm (Perth time) on 16 July Alinta may close the Offer early or extend the Closing Date without notice. Applicants are encouraged to submit their Application Forms as soon as possible after the Offer opens. 2 (b) Who may Apply? The Offer is being made only to Australian residents with an address in Australia (including persons receiving this Prospectus electronically) and persons who reside in jurisdictions where it is lawful for them to receive the Offer and apply for or be issued RePS. No action has been taken to register RePS or this Prospectus or otherwise permit a public offering of RePS in any jurisdiction outside Australia. In particular, the RePS have not been, and will not be, registered under the US Securities Act 1993 (as amended) and may not be offered or sold in the United States or to, or for the account of or benefit of, US persons. Accordingly, neither this Prospectus nor the Application Form may be sent to investors in the United States or otherwise distributed in the United States. (c) Payment Application Forms, duly completed, must be accompanied by a cheque(s) or money order(s) in Australian dollars drawn on an Australian branch of a financial institution. Cheques should be crossed not negotiable and made payable to the Alinta Limited RePS Offer Account. Applicants with firm allocations should refer to Section 2.2(f) for payment instructions. No brokerage or stamp duty is payable by applicants on the issue of RePS. (d) Minimum Application The price for each RePS is $100. Applications must be for a minimum of 25 RePS ($2,500). However, Alinta, in conjunction with the Lead Manager, reserves the right to scale back Applications below that number in the event of excess demand. (e) How to Apply Alinta Shareholders and General Applicants If you are registered as an Alinta Shareholder with a registered address in Australia at 5.00pm (Perth time) on 20 June 2003 (the Priority Record Date), you should use the yellow Shareholder Priority Application Form attached to or accompanying this Prospectus. If you are registered as an Alinta Shareholder on the Priority Record Date and you do not have a yellow Shareholder Priority Application Form (for example, because you obtained a copy of this Prospectus from the Alinta website), you should contact the Alinta RePS Information Line on telephone to receive your yellow Shareholder Priority Application Form. You must use the yellow Shareholder Priority Application Form to receive your Shareholder priority. If you are not a Shareholder on the Priority Record Date, you should use the blue Application Form attached to or accompanying this Prospectus or the Application Form obtained from the Alinta website at 7

10 2. DETAILS OF THE OFFER Completed Application Forms (including Application Forms obtained from the Alinta website) and accompanying cheques or money orders must be mailed to: Computershare Investor Services Pty Limited GPO Box D182 Perth WA 6840 or hand delivered to: Computershare Investor Services Pty Limited Level 2, 45 St George s Terrace Perth WA 6000 Application Forms and accompanying cheques or money orders from general applicants and Alinta Shareholders will not be accepted at any other address. By returning an Application Form, the applicant acknowledges that they have received and read this Prospectus. (f) How to Apply Firm Allocations If you have received a firm allocation of RePS from the Lead Manager or a Broker, the Lead Manager or Broker will be acting as your agent in applying for RePS and you must: deliver your completed Application Form and your cheque for the Application Monies to the Lead Manager or your Broker (not to Alinta or Computershare Investor Services Pty Limited) for delivery to Alinta on your behalf; and make your cheque for Application Monies payable to the Lead Manager or your Broker (not the Alinta Limited RePS Offer Account). These arrangements will be explained to you by the Lead Manager or your Broker. If you have a firm allocation of RePS and are in any doubt about what action you should take, you should immediately contact the Lead Manager or your Broker. (g) Enquiries If you require assistance to complete the Application Form or require additional copies of this Prospectus, you should contact the Alinta RePS Information Line on telephone If you are unclear in relation to any matter, or uncertain if RePS are a suitable investment for you, you should contact your stockbroker, accountant, lawyer or other professional adviser. 2.3 Other Information (a) Provision of Holding Statements Alinta will apply for the RePS to participate in CHESS and, if the RePS are admitted to quotation by ASX, no share certificates will be issued. Applicants who are issued with RePS will be provided with a holding statement which sets out the number of RePS issued to them. Holding statements for the RePS issued pursuant to this Prospectus are expected to be despatched on 25 July (b) Prospectus Available On-line A copy of this Prospectus may be viewed on-line in read-only format during the Exposure Period on the Alinta website at A copy of this Prospectus may be obtained on-line with an accompanying Application Form after the Exposure Period until the Closing Date. 8

11 Persons who receive a copy of this Prospectus in electronic form at are entitled to obtain a paper copy of the Prospectus (including any relevant accompanying Application Form), free of charge, until the Closing Date by contacting the Alinta RePS Information Line on telephone Shareholders eligible for priority may obtain a yellow Shareholder Priority Application Form by contacting this number. The Offer constituted by this Prospectus in electronic form is available only to persons receiving this Prospectus in electronic form within Australia. Completed Application Forms must be mailed or delivered to Alinta in the manner set out in Section There is no facility for on-line Applications. However, investors may obtain the Application Form from the Alinta website and submit the completed Application Form in the manner set out in Section TFNs/ABNs Investors should note that if they do not provide their tax file number (TFN), TFN exemption details (if applicable) or Australian Business Number (ABN) to Alinta, then Alinta will be required to withhold tax at the rate of 48.5% of the amount of any unfranked dividend on RePS held by those investors. A TFN/ABN collection form will accompany all holding statements, which are expected to be despatched on 25 July Privacy Statement If you apply for RePS and you are not already a Shareholder, you will be asked to provide personal information to Alinta (and the Lead Manager (or Broker if applicable) and the Registry on Alinta s behalf). Alinta collects, holds and uses that personal information to assess your Application, service your needs as an investor, provide facilities and services that you request and carry out appropriate administration. Under the Privacy Act 1988 (Cth) (as amended), you may request access to your personal information held by or on behalf of Alinta. You can request access to your personal information or obtain further information about Alinta s personal information management practices by contacting Alinta. 9

12 3. ANSWERS TO KEY QUESTIONS The purpose of this Section is to answer some of the questions which prospective investors may have about RePS. These answers are intended as a guide only. Further details are provided elsewhere in this Prospectus, which you should read in its entirety. The Terms of Issue of the RePS are set out in full in Appendix A. You are encouraged to read this Prospectus in full. If you are unclear in relation to any matter, or uncertain if RePS are a suitable investment for you, you should consult your stockbroker, lawyer, accountant or other professional adviser. 3.1 What are Alinta RePS? RePS are preference shares that: carry a non-cumulative fully franked Dividend, at the discretion of Alinta; pay Dividends generally on 31 March and 30 September each year, with the first Dividend payable on 31 March 2004; rank in priority to Ordinary Shares for payment of dividends and for a return of capital in the event of a winding-up; are perpetual but are also convertible into Ordinary Shares in certain circumstances; and have particular terms that may be reset at the discretion of Alinta on any Reset Date. Alinta may not issue shares ranking in priority to the RePS without the prior approval of Holders. 3.2 Why is Alinta issuing RePS? The issue of RePS will be used to partially fund the acquisition of the Non-Distribution Assets of UEL. Further details are set out in Sections 4.4 and What are the conditions precedent to the RePS being issued and what happens if they are not satisfied? The Offer is subject to: the passing of resolutions by Alinta s Shareholders at the General Meeting to authorise the issue of the RePS; the UEL Scheme being approved by UEL shareholders and the Court; Alinta being reasonably satisfied that the conditions precedent to Completion have been or will be satisfied or waived (see Section 8.8(a) for a summary of those conditions). If all of the above conditions are not satisfied by the Completion Date, no RePS will be issued under this Prospectus and Alinta will return Application Monies as soon as practicable without interest. Alinta also reserves the right to withdraw the Offer if the Buy-Back is not approved by Alinta s Shareholders at the General Meeting. 3.4 How many RePS are being issued? 1,250,000 RePS (to raise $125 million) will be issued. In the event of unsatisfied Shareholder demand, Alinta retains the right to issue a further 50,000 RePS ($5,000,000) in oversubscriptions. Alinta will only issue the oversubscriptions if demand for RePS is such that Shareholders applying for RePS are not able to be allocated the minimum Application number, being 25 RePS each ($2,500). 10

13 3.5 How will Dividends be determined? The Dividend Rate until 30 September 2006 will be fixed at the greater of: (a) 5.35% per annum; and (b) 0.85% above the three year Swap Rate prevailing on the Allotment Date. The Dividend Rate may be reset by Alinta on 30 September 2006 and following this, on specified Reset Dates. The next Dividend Rate may be above or below the initial Dividend Rate When will Dividends be paid? Subject to the conditions described in Section 3.7 below, Dividends will be payable semi-annually in arrears on 31 March and 30 September each year, with the first Dividend payable on 31 March Will Dividends always be paid? No guarantee can be given that a Dividend will always be paid. RePS are not debt instruments, and Dividends are not the same as interest payments. The payment of Dividends on RePS is subject to: the Directors, in their discretion, declaring or otherwise resolving to pay a Dividend; and there being no legal impediment to Alinta s payment of the Dividend. It is the Directors intention to pay Dividends on RePS and Ordinary Shares. 3.8 What happens if a Dividend payment is not made? Dividends are non-cumulative, and therefore if a Dividend, or part of a Dividend, is not paid in respect of any one period, it will not necessarily be made up in any subsequent period. Dividends on the RePS will be paid in priority to any dividends paid on Ordinary Shares. If a RePS Dividend is not paid, Alinta may not pay any dividends on securities over which the RePS rank in priority (including Ordinary Shares): without the approval of Holders by Special Resolution; or unless all Dividends in the past 12 months have been paid, or an Optional Dividend equal to the aggregate of all Dividends not paid on RePS in the past 12 months has been paid in full. 3.9 What happens if a Dividend is not franked? If a Dividend is not fully franked, the cash amount of the Dividend will be increased to compensate for the unfranked portion in accordance with the formula set out in the Terms of Issue. It is the Directors intention that Dividends will be fully franked. In addition, if there is a change in the Australian corporate tax rate applicable to the franking account of Alinta, the Dividend Rate will be adjusted in accordance with the formula set out in the Terms of Issue. 11

14 3. ANSWERS TO KEY QUESTIONS 3.10 What are Reset Dates? Reset Dates are dates on which Alinta may give notice (at least 40 Business Days before that date) specifying the changes to any or all of the following to apply after the Reset Date: the Dividend Rate; Dividend Payment Dates; the Minimum Conversion Number; the Conversion Discount; the next Reset Date; and the definition of Capital Distribution When do Reset Dates occur? The First Reset Date will occur on 30 September At each Reset Date, Alinta has the right to determine the timing of subsequent Reset Dates What happens on Reset Dates? (a) Alinta may vary terms of RePS On Reset Dates, Alinta may elect to change specified terms of the RePS. The new terms will apply from the Reset Date until and including the next Reset Date. If Alinta does not change the terms, the same terms will apply and the next Reset Date will be such that the period to the next Reset Date is the same as the period that has passed from the immediately preceding Reset Date until the relevant Reset Date. (b) What can a Holder do approaching a Reset Date? A Holder not wishing to accept the new terms may request that Alinta Exchange their RePS by delivering a Holder Exchange Notice at least 30 Business Days (but not more than three months) before the Reset Date in respect of all or some of the Holder s RePS. Alinta will then notify the Holder by notice at least 25 Business Days prior to the Reset Date as to whether it proposes to: convert the RePS into Ordinary Shares in accordance with the Conversion Ratio; or procure the acquisition of the RePS by a third party and deliver to the Holder cash or a combination of cash and Ordinary Shares generally equal to the value of Ordinary Shares that would have been received had Conversion occurred. If Alinta does not give notice to Holders as to which of the options it has chosen, RePS specified in the Holder Exchange Notice will convert into Ordinary Shares. (c) What can Alinta do approaching a Reset Date? Alinta may Exchange all or some of a Holder s RePS on a Reset Date and will notify the Holder by a Company Exchange Notice at least 40 Business Days (but not more than six months) before the Reset Date. Where Alinta elects to Exchange, Alinta must convert RePS into Ordinary Shares in accordance with the Conversion Ratio. 12

15 3.13 Can Exchange occur on a date other than a Reset Date? In addition to Exchange on a Reset Date, a Holder can request Exchange: upon certain Trigger Events (e.g. non-payment of Dividend, certain takeover bids and schemes of arrangement etc.); at any time to receive the Minimum Conversion Number of Ordinary Shares; and In addition to Exchange on Reset Dates, Alinta can effect Exchange: if there is a change in taxation or other regulations which affect RePS; upon certain Trigger Events; where the aggregate of the Face Value of RePS on issue falls below $25 million; or at any time from six months prior to the next Reset Date if the VWAP exceeds: 3 Face Value Minimum Conversion Number x 140%, for 20 consecutive Business Days What happens on Conversion? On Conversion, each of the RePS will convert into Ordinary Shares that will rank equally in all respects with Ordinary Shares from the Exchange Date. For the period to the First Reset Date, each of the RePS that are to be converted will convert into Ordinary Shares at a 2.5% discount to the VWAP of Ordinary Shares traded on ASX during the 20 Business Days immediately preceding the Exchange Date. The number of Ordinary Shares arising from Conversion will not be less than the Minimum Conversion Number. This means that for the period to the First Reset Date, the number of Ordinary Shares issued on Conversion will vary generally depending on the Ordinary Share price over the 20 Business Days immediately prior to Conversion. Where the VWAP of Ordinary Shares (over the 20 Business Days prior to the Exchange Date) is above $6.75, Holders will receive Ordinary Shares (based on that VWAP) with a value generally greater than $ Will I be able to request repayment of my investment? Holders will have no right to require Alinta to repay the monies originally paid for the RePS, except in a winding-up of Alinta. On Reset Dates, and in certain circumstances prior to Reset Dates, Holders may request Exchange of their RePS. Holders will also have the right to Exchange each of their RePS at any time, in which case the Holder would receive only the Minimum Conversion Number of Ordinary Shares Can RePS be purchased or sold on ASX? Alinta will apply within seven days after the date of this Prospectus for the RePS to be quoted on ASX. Once quoted on ASX, the RePS can be purchased or sold through any stockbroker in Australia. 13

16 3. ANSWERS TO KEY QUESTIONS 3.17 In a winding-up, what will Holders of RePS receive? In the event of a winding-up of Alinta, Holders of RePS will be entitled to a return of capital of up to the Face Value of the RePS and any accrued Dividend entitlement after all creditors and other liabilities of the Company have been paid. RePS Holders will rank ahead of holders of Ordinary Shares in a winding-up to the extent of the Face Value of the RePS and any accrued Dividend entitlement. In the event of a shortfall of funds on a winding-up of Alinta, there is a risk that Holders of RePS will not receive a full return of capital or accrued Dividend entitlement on the RePS What are the taxation implications of holding or selling RePS? The taxation implications of investing in RePS will depend on Holders individual circumstances. Prospective investors should obtain their own taxation advice. A summary of some of the relevant matters appears in a Taxation Report from KPMG set out in Section Do RePS have voting rights? RePS do not have voting rights, except in the limited circumstances set out in the Terms of Issue Is brokerage or stamp duty payable? No brokerage or stamp duty on the issue of RePS is payable by investors. Stamp duty will not be payable on subsequent transfers of RePS once the RePS are quoted on ASX. However, brokerage may be payable on any subsequent transfer of RePS What are the risks of investing in RePS? An investment in Alinta through the RePS will involve some risks. You should refer to Section 6 for further information Where can I obtain more information on Alinta? Alinta is a disclosing entity for the purposes of the Corporations Act and is subject to regular reporting and disclosure obligations under the Corporations Act and the Listing Rules. At any time until the Closing Date, any person may apply for, and Alinta will provide, free of charge, a copy of any of the continuous disclosure documents listed in Section 8.6, including Alinta s Annual Financial Report for the year ended 31 December 2002 (being the most recent financial report lodged with ASIC). Copies of the documents lodged with ASIC in relation to Alinta (other than documents referred to in section 1274(2)(a) of the Corporations Act) may be obtained from, or inspected at, an office of ASIC or the registered office of Alinta. 14

17 4. ALINTA - EXISTING AND PROPOSED OPERATIONS 4.1 Overview Alinta is the leading distributor and retailer of natural gas in Western Australia. It delivers natural gas to more than 470,000 industrial, commercial and residential customers in Western Australia through its network of approximately 11,000 kilometres of pipelines. On 23 April 2003, Alinta announced a series of transactions that will result in Alinta emerging as an operator, manager and part owner of approximately $4 billion in regulated energy assets. Further details of these transactions are contained in Section 4.4 and are referred to collectively in this Prospectus as the Transactions Existing Business Profile Alinta s core operating businesses comprise a gas distribution business (AlintaGas Networks) and a gas trading and retail business (Alinta Sales). (a) AlintaGas Networks AlintaGas Networks operates a ring-fenced distribution business in accordance with the National Access Code. It is Western Australia s leading natural gas distributor, delivering gas to businesses and around 60% of Western Australian households through its network of approximately 11,000 kilometres of pipelines. AlintaGas Networks has a key objective to extend its network wherever it is economically viable to do so. During 2002, in excess of 17,000 new customers were connected to AlintaGas Networks gas distribution network. Whilst the majority of these customers are located in the Perth metropolitan area, significant numbers are also located in the regional centres of Geraldton, Kalgoorlie, Mandurah, Bunbury, Busselton and Albany. As of 1 January 2002, natural gas sites consuming more than one terajoule of gas per annum became open to competition, with full retail contestability likely to occur by mid AlintaGas Networks has been involved in establishing the rules and systems for full retail contestability. However, this will require development of systems to allow third parties easy access to its network. An independent retail market operator, which will be responsible for administering the market rules, was established in January AlintaGas Networks will continue to act as the interim market operator for the one terajoule and above market, until the final retail market rules are formally adopted. (b) Alinta Sales Alinta Sales is the leading retailer of natural gas supplying more than 470,000 industrial, commercial and residential customers in Western Australia. It also retails reticulated LPG at the regional centre of Albany and the north-eastern suburb of The Vines in the Swan Valley. Alinta Sales undertakes: the purchase of gas, the purchase of gas transport services from transmission pipeline operators and AlintaGas Networks, and the management of those contracts and arrangements; and the marketing of gas to large and small industrial and commercial businesses and residential customers. Alinta s largest gas customer is Wesfarmers LPG, which was a significant contributor to earnings in The Wesfarmers LPG sales agreement continues in force until 30 June 2005 and thereafter until terminated by at least one year s prior notice given by one party to the other. In addition, specifications contained in the gas supply contracts with the North West Shelf Joint Venture Partners (NWSJVP) that provide for certain minimum average levels of LPG in gas delivered cease to apply on 30 June Alinta is currently in discussions regarding these issues but there is no certainty that Alinta will be able to maintain the current level of EBITDA contribution from this contract past June

18 4. ALINTA - EXISTING AND PROPOSED OPERATIONS During 2002, the Alinta Sales business experienced some margin erosion on contestable customers, but was able to successfully retain the business of key customers despite increased competition in the market. Alinta s capacity to offer its customers a flexible and reliable gas supply at a competitive price continues to be a key factor for customers choosing Alinta as their preferred supplier. 4.3 Electricity In July 2002, Alinta announced that it had entered into a Memorandum of Understanding with Alcoa of Australia Limited (Alcoa) to develop energy efficient power units at Alcoa s alumina refineries in Western Australia. Alinta will build and own the units, whilst Alcoa will be responsible for operation and maintenance. Alcoa will use all of the steam output from the units in its alumina refineries and Alinta will sell the electricity into the retail electricity market. From mid 2005, with the first co-generation power unit scheduled to be commissioned at Pinjarra, Alinta will become a participant in the Western Australian electricity market at both generation and retail levels. Diversifying into electricity is a natural move that will allow Alinta to leverage off its existing customer base and become a dual-fuel provider. Co-generation was chosen because the heat, which is usually wasted, will be captured and used to create steam, which Alcoa will use as part of its refinery process. This enables the process to be over 80% efficient in converting gas fuel into useful energy, compared with less than 50% for most other power plants. Greenhouse gas emissions will also be significantly lower than other fossil fuelled power generation plants operating in Western Australia. The efficient nature of the unit should enable Alinta to produce low cost electricity for the Western Australian market. The first co-generation unit will produce 140 MW of electricity and about 230 tonnes of steam per hour and will cost approximately $130 million to build. The first unit is expected to be operational in the second quarter of calendar The current status of the project is as follows: approvals some key approvals have been received from the Foreign Investment Review Board, Western Australian environmental authorities and the Western Australian Office of Energy; electricity sales Alinta has now secured contractual commitments for over 110 MW of the output from the first co-generation unit; construction Alinta has finalised a Memorandum of Understanding with Mitsubishi Australia Limited (Mitsubishi) under which Mitsubishi and Downer Engineering (Power Division) will supply the first of Alinta s co-generation units and support Alinta s ongoing development of co-generation units; and finance Alinta has short-listed three banks for the co-generation project. There is the potential for Alinta and Alcoa to develop further co-generation units on a staged basis across Alcoa s refinery sites. The rollout schedule will be determined by the parties after consideration of, among other issues, the pace and scope of electricity reform in the Western Australian market, the growth in electricity requirements for the south west electricity system and the rate of capacity expansion of the Dampier to Bunbury Natural Gas Pipeline (DBNGP). 4.4 Restructure of Alinta (a) Overview On 23 April 2003, Alinta announced a series of Transactions which will result in the Company emerging as an operator, manager and part owner of approximately $4 billion in regulated energy assets. This opportunity arose due to the desire of Aquila Inc (Aquila) to exit its Australian assets comprising interests in each of UEL, Multinet and Alinta. 16

19 As part of the Transactions, Alinta agreed to acquire the 36 million Alinta Ordinary Shares held indirectly by Aquila at a price of $4.26 per share. Following the release of Transaction details to ASX, Alinta was able to facilitate the on-sale of these shares to a range of institutional and professional investors at a price of $4.50 per share on 1 May On the same date, Alinta placed an additional eight million Ordinary Shares to a range of institutional and professional investors, raising $36 million before costs. The amount raised under the placement will be used to partially fund the acquisition of the Non-Distribution Assets. Pursuant to the Transactions, Alinta will: acquire a 34% interest in the distribution assets of UEL and a 100% interest in the Non-Distribution Assets of UEL (including 36 million Alinta Ordinary Shares held indirectly via WAGH); acquire a 19.9% interest in Multinet, via MGH; sell approximately 25% of AlintaGas Networks into a diversified utility and energy fund to be managed by AMP Henderson; and enter into long term management contracts to operate, maintain and manage the distribution networks of each of UEL, Multinet and AlintaGas Networks (ANS Services Agreements). 4 In order to achieve the above, Alinta and AMP Henderson will seek to acquire (through a series of acquisition vehicles) the 43% of UEL held by the public through a scheme of arrangement at $3.15 per share. The UEL Scheme is subject to both UEL shareholder and Court approval. The Directors are of the view that the Transactions will: diversify Alinta s regulatory, commodity and geographic exposure; provide Alinta with a platform for future growth, by positioning Alinta alongside a long term asset owner; leverage Alinta s core competency in operating and managing energy infrastructure assets; and remove the remaining 21.4% shareholding held by WAGH. DIAGRAM: SIMPLIFIED POST-TRANSACTION STRUCTURE (b) The Transactions (I) ACQUISITION OF UEL The key features of the acquisition of UEL are: Alinta and AMP Henderson have formed a special purpose company, United Energy Distribution Holdings Pty Limited (UEDH) to acquire UEL. Alinta will own 34% of the capital of UEDH and AMP Henderson will establish Diversified Utility and Energy Trusts (DUET) which will own the remaining 66%; UEDH will acquire Aquila s interest in Power Partnership Pty Limited (PPL) for a cash consideration of $470.4 million representing $3.15 per UEL share and approximately $22 million for Aquila s interest in PPL s other assets; 17

20 4. ALINTA - EXISTING AND PROPOSED OPERATIONS PPL (which will be wholly owned by UEDH) will seek to acquire the interest of the public in UEL via the UEL Scheme for $3.15 per UEL share; Immediately following implementation of the UEL Scheme, Alinta will acquire UEL s interests in Uecomm, NPS and WAGH, a transfer of, or licence to use certain intellectual property rights held by UEIP and the loans made by UEL to Uecomm. These interests are referred to as the Non-Distribution Assets. Following the acquisition of the Non-Distribution Assets by Alinta, UEL s primary asset will be the electricity distribution network and UEL will be renamed United Energy Distribution Limited (UED); and Alinta will acquire the Non-Distribution Assets for a total of approximately $210 million. The final purchase price for these assets will be determined prior to Completion, subject to adjustments for movements in UEL s net debt. The Non-Distribution Assets are described in Section 4.5. (II) ACQUISITION OF MULTINET The Transactions involve Alinta acquiring a 19.9% interest in Multinet. The Multinet gas distribution asset is currently owned by the Energy Partnership Group. MGH has been established as a special purpose company to acquire the Energy Partnership Group. The ordinary shares of MGH will be owned by DUET (80.1%) and Alinta (19.9%). MGH entered into a sale and purchase agreement in respect of the Energy Partnership Group on 22 April Alinta has also agreed to subscribe for an additional class of preferred equity in MGH in certain circumstances in the three years following the Completion Date, up to a maximum of $5 million per year and an aggregate maximum of $11 million. Alinta is only required to subscribe for this preferred equity when the return on equity in MGH is less than 11.75% in any of the first three years following the Completion Date. Alinta s preferred equity will receive a greater proportion of distributions if returns exceed a benchmark yield of 13.5% in any year, and will receive priority in a winding-up of MGH. Alinta may require MGH not to proceed with the Multinet acquisition if the UEL Scheme is not implemented. In that case, Alinta would not be required to subscribe for a 19.9% interest in the ordinary equity of MGH, nor would Alinta be required to provide the preferred equity facility to MGH. (III) SELLDOWN OF ALINTAGAS NETWORKS Alinta has agreed to sell approximately 25% of AlintaGas Networks to DUET for consideration of $44 million. The selldown of AlintaGas Networks is conditional on Completion. In addition, AMP Henderson may require Alinta to sell down its ordinary shareholding interest in AlintaGas Networks, held through ANH, to 50.1% prior to 29 February 2004 to parties identified by AMP Henderson, except that if such a party is a competitor of Alinta as an operator of a gas distribution business, then any selldown to that party will be subject to Alinta s approval. Alinta intends to maintain a majority interest in AlintaGas Networks. The selldown of approximately 25% is consistent with the objective of spreading Alinta s geographic, commodity and regulatory risk across a number of infrastructure assets and freeing up capital to invest in higher returning activities. In addition, the transaction further confirms Alinta s and AMP Henderson s intentions to develop a strong, mutually beneficial relationship for the future. (IV) SERVICES AGREEMENTS Alinta (through a new subsidiary, Alinta Network Services Pty Ltd (ANS)) will enter into the ANS Services Agreements. The ANS Services Agreements will enable Alinta to leverage its core competency in managing and operating energy infrastructure assets. 18