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APA Group Ltd

Utilities

APA Group Ltd

Latest price

$ 103.20

  • ASX code
    YTMAP1
  • Maturity date
    20-Oct-2023
  • Capital structure
    Senior Unsecured
  • Coupon type
    FIXED
  • Coupon P.A
    3.750%
  • Issue Date
    20-Oct-2016
  • Next ex. distribution date
    11-Oct-2018
  • Next interest payment date
    20-Oct-2018
  • Payment frequency
    Semi-Annual

Issuer

APT Pipelines Limited (“APA”)

Principal Guarantor

Australian Pipeline Limited, in its capacity as trustee and responsible entity of Australian Pipeline Trust.    

Guarantors

The Principal Guarantor and certain of its subsidiaries    

Guarantee

Payment of the principal, interest and other amounts due on the MTNs is guaranteed by the Guarantor under a Deed Poll of Guarantee dated 12 July 2010, as supplemented by the Supplemental Deed Poll date 7 October 2016.

Base Terms

Medium Term Note Programme dated 12 July 2010, as supplemented by the Supplemental Deed Poll date 7 October 2016.    

Pricing Supplement

Dated 18 October 2016    

APA Bonds

Fixed Rate Medium Term Notes (MTNs)    

Denomination(s)

A$10,000    

Status and Ranking

The MTNs and Guarantee will be direct, unconditional, unsubordinated, irrevocable (in the case of the Guarantors’ obligations under the Guarantee) and unsecured obligations of APT and the Guarantors, respectively, and will rank at least pari passu with all other unsecured and unsubordinated obligations of the Issuer and the Guarantors other than those mandatorily preferred by law.

Issue Size

A$200,000,000    

Issue Date

20 October 2016    

Maturity Date

20 October 2023    

Interest Rate

3.75% per annum, payable semi-annually in arrears (in 2 coupons of 1.875%) on 20 April and 20 October in each year including the Maturity Date.

Negative Pledge

APT must not, and must ensure that each Guarantor does not, create or allow to exist over any of its assets any encumbrance (other than certain permitted encumbrances) securing Financial Indebtedness unless the obligations of the Guarantors and APT with respect to the MTNs are secured equally and rateably with such Financial Indebtedness. 

Where Financial Indebtedness means any indebtedness in respect of moneys borrowed or in respect of any financial accommodation.

Early Redemption by Issuer

  • Yes, for tax reasons, where the Issuer is required to pay an additional amount as a result of a withholding imposed by the Commonwealth of Australia or a political subdivision within Australia.
  • Yes, at any time after 24 July 2023 on the giving at least 30 days and not more than 60 days’ notice. Holders will receive principal and accrued interest up to, but not including, the early maturity date. 

Early Redemption at the Option of the Holders

Yes, if there is a Change of Control, in which case the issuer is scheduled to pay holders 101% of the principal outstanding and accrued interest at the date of redemption.

Key Risks

The value of an investment in APA Bonds may fluctuate due to various factors, including investor perceptions, worldwide economic conditions, interest rates, debt market conditions and factors that may affect APA’s financial performance. The following risks may also affect an investment in APA Bonds:

  • Bypass and Competitive Risk - when a new transmission pipeline offers gas transportation service to the same end market serviced by existing pipelines. 
  • Gas Demand Risk - If the demand for gas weakens, it may reduce the demand for future contracted pipeline capacity and adversely impact APA Group’s future revenue, profits and financial position.
  • Operational Risk - APA Group is exposed to a number of operational risks such as equipment failures or breakdowns, rupture of pipelines, information technology systems failures or breakdowns, employee or equipment shortages, contractor default or other unplanned interruptions.
  • Contract Renewal Risk - A large part of APA Group’s revenues are the subject of long term revenue contracts with end customers.  Due to a range of factors including customer demand risk, gas supply risk, counterparty credit risk, bypass and competitive risk, APA Group may not be successful in recontracting the available pipeline capacity when it comes due for contract renewal. 
  • Construction and Development Risk - APA Group’s capital expenditure on growth projects is expected to be significant.  In certain circumstances, APA Group sets the commercial terms with its customers based on expected capital expenditure costs.  Should these costs exceed those estimates used in finalising commercial terms with customers, it may adversely impact APA Group’s future profits and financial position.

 The following risks may also affect an investment in APA Bonds:

  • Credit Risks associated with the Issuer and any Guarantors;
  • Liquidity Risk - An active secondary market in respect of the Bonds may never be established or may be illiquid and this would adversely affect the value at which an investor could sell the Bonds;
  • Interest Rate Risks – bondholders may suffer unforeseen losses due to fluctuations in interest rates;
  • Early Call Risk – the return on the bonds may be reduced if the Issuer exercises their Early Redemption right;
  • Litigation Risks - Risks relating to litigation and regulatory actions;
  • Default Risk - if an event of default occurs under the Bonds, or the Issuer fails to perform any obligation in relation to the Bonds, such event or failure may impact on the value of an investment in the Bonds, the transferability of the Bonds and the ability of a holder to recover amounts due under the Bonds. In assessing potential default risk, a bondholder should consider the periodic and continuous disclosures made by the Issuer.

Key Benefits

Key benefits include:

  • interest paid semi-annually in arrears;
  • interest paid as 100% cash;
  • interest is not deferrable nor are interest payments discretionary;
  • rank equally with all other senior and unsecured creditors of the Issuer.    

Event of Default

Events of Default include:

  • Failure to pay: Applicable, with a cure period of 5 Business Days;
  • Other failure: Applicable, with a cure period of 20 days;
  • Cross default: Applicable, with a Threshold Amount of A$100,000,000;
  • Insolvency Event: an Insolvency Event occurs in respect of APT or a Guarantor (and in the case of any such Insolvency Event in relation to a subsidiary of APT, such event has had or is likely to have a Material Adverse Effect);
  • Enforcement process: Applicable, with a Threshold Amount of A$50,000,000;
  • Trust: Variations of the Trust Deed that are likely to have a Material Adverse Effect, including the removal of the Principal Guarantor and variation to the Principal Guarantor’s right of indemnity out of the Trust;
  • Nationalisation: all or a substantial part of the assets of APT or a Guarantor are compulsorily acquired by, or by order of, a governmental, or any governmental authority orders the sale or divesting of all or a substantial part of the assets of APT or a Guarantor, and in any case such action has or is reasonably likely to have a Material Adverse Effect;
  • Change of control of Issuer: APT ceases to be a subsidiary of the Principal Guarantor; and
  • Vitiation (reduction in value or quality): the Deed Poll or the Guarantee ceases to be in full force and effect; or APT or a Guarantor repudiates the Deed Poll or the Guarantee.

Public Offer test Compliant

Yes

FATCA

If a payment on the bonds is subject to a withholding tax under FATCA, no additional amounts will be paid by the Issuer, and a holder of the bonds will receive less than the amount the holder would have otherwise received.

Coupon Schedule to Maturity

  • 20 April 2017
  • 20 October 2017
  • 20 April 2018
  • 20 October 2018
  • 20 April 2019
  • 20 October 2019
  • 20 April 2020
  • 20 October 2020
  • 20 April 2021
  • 20 October 2021
  • 20 April 2022
  • 20 October 2022
  • 20 April 2023
  • 20 October 2023 - Maturity Date

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