AusRAIL, Market Sectors

Aurizon completes debt refinancing

<span class="" id="parent-fieldname-description"> Rail freight operator Aurizon has completed a $3.6bn debt refinancing move, which will pay off $2.4bn of existing debt and free up capital for future network projects. </span> <p>The move, announced by Aurizon back in May, is also intended to isolate Aurizon’s subsidiary, Aurizon Network, as a stand-alone asset, setting the company up to potentially sell off a portion of its network to a private investor.</p><p>Aurizon Network was separated in this sense from parent company Aurizon Group, with Aurizon Network taking on $3bn in debt, and its parent company taking on just the remaining $600m.</p><p>Aurizon Network’s $3bn in debt will be financed by 13 domestic and international banks, including Commonwealth Bank, ANZ, NAB and Westpac in Australia, and several Asian and North American banks.</p><p>Aurizon Group’s $600m debt will be financed by four banks, including Commonwealth Bank and NAB.</p><p>Keith Neate, chief financial officer of Aurizon, was pleased with the level of demand from banks for Aurizon’s debt facilities.</p><p>“We received strong demand from a large number of domestic and international banks for our debt facilities, underpinning the quality of the Aurizon and Aurizon Network businesses, and we have secured debt facilities on attractive pricing and terms,” he said.</p><p>Lance Hockridge, managing director and CEO of Aurizon, said in May the restructure was reflective of Aurizon Network’s stand-alone stability as an asset.</p><p>“As a regulated asset with stable long-term revenues, Aurizon Network is suited to bearing its own debt load,” he said.</p><p>Hockridge also said the restructure was designed to provide the flexibility for other funding sources, such as outside investment, in Aurizon Network.</p><p>To that end, Aurizon announced its talks with “a limited number of potential investors” regarding the sale of a stake of its Central Queensland Coal Network (CQCN), in May, as well.</p><p>The Government-regulated CQCN, valued by Macquarie at around $7bn, is operated by Aurizon Network.</p><p>The 2670km network includes the Moura, Blackwater, Goonyella and Newlands systems, connecting the state’s key mining regions with port facilities at Gladstone, Hay Point and Abbot Point in North Queensland.</p><p>Aurizon says the acquisition of a minority stake of CQCN would include equivalent governance rights, including representation on the Aurizon Network Board and consent rights in relation to significant matters.</p><p>Analysts are predicting the sale of between 20% and 30% of the CQCN – worth between $1.4bn and $2.1bn.</p>