APA SUB GROUP 
By
ASX RELEASE 17 August 2012
The Manager
ASX Market Announcements
Australian Securities Exchange
4th Floor, 20 Bridge Street
Sydney NSW 2000
Dear Sir or Madam
Company Announcement
I attach the following announcement for release to the
market:
• APA announces a further cash increase in its offer for HDF Yours sincerely
Mark Knapman
Company Secretary
ASX RELEASE 17 August 2012
APA Group (ASX:APA) today announced a further increase in its
offer for Hastings Diversified
Utilities Fund (ASX:HDF).
APA will increase its offer by a further $0.18 cash to $0.80
in cash and 0.390 APA securities for each
HDF security if it becomes entitled to proceed to compulsory
acquisition ("90% Offer").
Regardless of whether APA is entitled to proceed to
compulsory acquisition, APA's offer is increased by $0.10
cash to $0.72 in cash and 0.390 APA securities for each HDF
security ("Minimum Offer").
Based on yesterday's closing price of $4.70 for APA
securities, the implied value of the 90% Offer is
$2.63 per HDF security, and the implied value of the Minimum
Offer is $2.55 per HDF security.
The implied value of APA's offer is superior to the offer
from Pipeline Partners Australia (PPA) of
$2.43, announced on 15 August 2012, representing a premium of
• 8.4% based on the 90% Offer; and
• 5.1% based on the Minimum Offer.
APA Group Chairman, Mr Len Bleasel said: "APA's offer is
clearly superior to the current PPA offer now on the table
for HDF. This is the case when using any price at which APA
securities have traded since APA announced its takeover offer
on 14 December 2011 - from $4.46 to $5.34 - as well as when
using the value range for APA securities of $4.80 to $5.00
determined by Grant Samuel, the independent expert.
"We expect the independent directors to seek the opinion of
the independent expert on the comparative values of the APA
offer and the PPA offer as soon as possible."
Using the 3-month VWAP of APA securities on 16 August 2012 of
$4.96, the implied value of APA's
90% Offer is $2.73 and the implied value of APA's Minimum
Offer is $2.65.
Mr Bleasel said: "As our offer contains APA securities, the
long-term benefits derived from the integrated APA portfolio,
which will include the majority of HDF's assets, will accrue
to all APA securityholders, including HDF investors who
retain an investment in APA.
"APA has a track record of delivering strong and consistent
returns for investors, and we believe that our offer
containing APA securities will be attractive to, and
appropriately valued by, HDF investors who wish to retain an
ownership interest in the HDF pipelines.
"We anticipate our increased offer will be formally
recommended by the independent directors of
HDF."
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ASX RELEASE 17 August 2012
APA's increased offer triggers the two business day notice
period under which PPA has the right to match this offer in
accordance with the takeover bid implementation deed between
HDF and PPA. After this period the independent directors of
HDF are able to publicly change, withdraw or modify their
recommendation of the PPA offer and recommend APA's increased
offer.
The offer consideration will be reduced by any further HDF
distributions paid to HDF securityholders during the offer
period, but there is no reduction for any HDF distributions
paid prior to 8 August 2012.
Mr Bleasel added: "Unlike the alternative offer, APA's
increased offer continues to provide HDF securityholders the
opportunity to retain exposure to the majority of the HDF
assets and thereby continue to benefit from the future growth
prospects of these assets. They will also benefit from APA's
integrated asset portfolio, proven management and
securityholder returns.
APA intends to continue to pay distributions from operating
cash flow with a view to growing distributions over the
longer term. If APA's offer succeeds, and the offer
consideration is paid on or before 31 December 2012, HDF
securityholders who continue to hold APA securities at that
date
will also receive APA's FY13 interim distribution.
Following discussions with its own financiers, APA now
intends to waive the conditions of its offer relating to
change of control and other matters pertaining to HDUF's
financing arrangements (conditions (i), (j) and (k) of the
offer). APA confirms that in the event that it moves to
compulsory acquisition of HDF, APA has sufficient funding
resources available to fully repay all HDF debt whilst
retaining prudent headroom for ongoing APA Group operations.
In those circumstances the "change in control" provisions
within HDF's funding will be of no consequence to APA.
APA also confirms that it would be prepared to waive
condition (s) (payments to and undertaking by the HDF
Responsible Entity) of its offer if Hastings Funds Management
Limited (HFML) as responsible entity makes an announcement
that it agrees to limit its performance fee for the period
ended 30 June 2012 to $50 million, and agrees that it will
not accept any performance fee for any period commencing on
or after 1 July 2012 while the APA offer remains open or APA
has a relevant interest in more than 50% of HDF securities.
HFML has already agreed to this arrangement in relation to
the PPA offer.
A formal notice varying the offer will be lodged. APA previously advised the market that it intended to lodge and send to HDF securityholders a supplementary bidder's statement reflecting its improved offer announced on 9 August 2012. APA notes that it intends to defer dispatch of any supplementary bidder's statement in relation to the increased offer until HDF's response to its increased offer announced today is known or as otherwise appropriate to keep the market informed.
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ASX RELEASE 17 August 2012
The offer is scheduled to close at 7.00 pm (Sydney) on 4
September 2012 unless further extended. If HDF
securityholders have any questions in relation to the offer,
they can contact the APA Offer Information Line on 1800 129
431 (within Australia), or +61 2 9280 7731 (outside
Australia).
APA is Australia's largest natural gas infrastructure business, owning and/or operating more than $8 billion of gas
transmission and distribution assets. Its pipelines and assets span every state and territory on mainland Australia, delivering 50% of the nation's gas usage. Unique amongst its peers, APA has direct management and operational control over its assets and the majority of its investments. APA also holds minority interests in energy infrastructure enterprises including Envestra, SEA Gas Pipeline, Hastings Diversified Utilities Fund and Energy Infrastructure Investments.
For more information visit APA's website, www.apa.com.au
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ASX RELEASE 17 August 2012
APA becomes entitled to proceed to compulsory acquisition
APA security price | Implied value of the Offer Consideration | Implied premium of the Offer Consideration | ||||
APA security price | Value of APA security | Cash | Total offer consideration | To 5 day VWAP* of HDF securities of $1.78 | To 3 month VWAP* of HDF securities of $1.66 | To PPA offer of $2.43 |
$4.46 Lowest closing price since 14 Dec 2011 | $1.74 | $0.80 | $2.54 | 43.0% | 53.2% | 4.5% |
$4.60 | $1.79 | $0.80 | $2.59 | 46.0% | 56.5% | 6.7% |
$4.70 Closing price on 16 Aug 2012 | $1.83 | $0.80 | $2.63 | 48.2% | 58.8% | 8.4% |
$4.80 Lower end of IE APA value range** | $1.87 | $0.80 | $2.67 | 50.4% | 61.2% | 10.0% |
$4.96 3 month VWAP on 16 Aug 2012 | $1.93 | $0.80 | $2.73 | 53.9% | 64.9% | 12.5% |
$5.00 Upper end of IE APA value range** | $1.95 | $0.80 | $2.75 | 54.8% | 65.9% | 13.2% |
$5.20 | $2.03 | $0.80 | $2.83 | 59.2% | 70.6% | 16.4% |
$5.27 Highest closing price since 14 Dec 2011 | $2.06 | $0.80 | $2.86 | 60.8% | 72.2% | 17.5% |
* VWAP of HDF securities is on 13 December 2011 - the day before APA announced its initial takeover offer.
** See the independent expert's report contained in the target's statement released by HDF on 3 August 2012 in relation to the PPA offer.
APA's increased offer will not be reduced for any HDF distributions paid since the initial offer was announced on 14 December 2011. However, the value of the offer will be reduced by the amount of any HDF distribution which is paid to HDF securityholders after 8 August 2012.
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ASX RELEASE 17 August 2012
securities regardless of whether APA is entitled to proceed to compulsory acquisition
APA security price | Implied value of the Offer Consideration | Implied premium of the Offer Consideration | ||||
APA security price | Value of APA security | Cash | Total offer consideration | To 5 day VWAP* of HDF securities of $1.78 | To 3 month VWAP* of HDF securities of $1.66 | To PPA offer of $2.43 |
$4.46 Lowest closing price since 14 Dec 2011 | $1.74 | $0.72 | $2.46 | 38.5% | 48.3% | 1.2% |
$4.60 | $1.79 | $0.72 | $2.51 | 41.5% | 51.6% | 3.5% |
$4.70 Closing price on 16 Aug 2012 | $1.83 | $0.72 | $2.55 | 43.7% | 54.0% | 5.1% |
$4.80 Lower end of IE APA value range** | $1.87 | $0.72 | $2.59 | 45.9% | 56.3% | 6.7% |
$4.96 3 month VWAP on 16 Aug 2012 | $1.93 | $0.72 | $2.65 | 49.4% | 60.1% | 9.2% |
$5.00 Upper end of IE APA value range** | $1.95 | $0.72 | $2.67 | 50.3% | 61.0% | 9.9% |
$5.20 | $2.03 | $0.72 | $2.75 | 54.7% | 65.7% | 13.1% |
$5.27 Highest closing price since 14 Dec 2011 | $2.06 | $0.72 | $2.78 | 56.3% | 67.4% | 14.2% |
* VWAP of HDF securities is on 13 December 2011 - the day before APA announced its initial takeover offer.
** See the independent expert's report contained in the target's statement released by HDF on 3 August 2012 in relation to the PPA offer.
APA's increased offer will not be reduced for any HDF distributions paid since the initial offer was announced on 14 December 2011. However, the value of the offer will be reduced by the amount of any HDF distribution which is paid to HDF securityholders after 8 August 2012.
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