Origin launches capital raising

APLNG's Curtis Island LNG facility

APLNG's Curtis Island LNG facility

Origin Energy has confirmed it will look to its shareholders to repair the firm’s debt levels and consolidate its non-core businesses.

Hit by the declining oil price, which continues to squeeze energy companies’ profits, Origin today announced a trading halt and plans to raise $2.5 billion from shareholders, cut opex and sell off more non-core assets, all in an effort to repair the firm’s books and shave billions from its $A13 billion net debt levels.

The announcement comes in the wake of Origin’s sale of NZ power generator Contact Energy earlier this year and on top of a $A2 billion cost cutting regime, which commenced last year.

Origin stocks are trading at $6.10 per share, down 60 per cent in a year.

“We believe this package of initiatives is prudent in light of current market conditions and strikes a reasonable balance in the best interest of all shareholders,” Origin chairman Gordon Cairns said.

The company will launch a 4-for-7 underwritten share offer at $A4 a share, a 34 per cent discount on Tuesday’s closing price.

“In addition to raising $A2.5 billion in capital we plan to reduce the company’s dividend for FY2016 and FY2017, make further reductions in capital expenditure and sell non-core assets to strengthen Origin’s balance sheet.”

Managing director Grant King rallied the confidence-building message, saying the firm will narrow its focus to its two core Australian businesses – energy markets and integrated gas – while selling off non-core assets in Australia’s Cooper and Perth Basins and infrastructure including gas pipelines.

Mr King told investors that while the Australia Pacific LNG joint-venture has invested in production and pipeline capacity beyond existing sales contracts, Origin will not make further contributions to the project beyond the previously announced $A1.8 billion, which will bring both trains into production next year.

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