AGL shares at least steadied yesterday after the solid 7.7% sell-off on Tuesday in the wake of news of a firm but indicative approach to telco Vocus at $4.85 a share and the $100 million cut to expected 2019-20 earnings from a lengthy electricity generator outage at the Loy Yang station in Victoria.
Fourth time lucky for Vocus? The telco, Vocus will open its books exclusively to AGL Energy, less than a week after a Swedish private equity group, EQT withdrew its non-binding approach after doing due diligence.
UBS notes Vocus has abandoned the NZ asset sale process. The answer to whether the company needs to raise equity to de-leverage depends on the new covenants negotiated as part of the re-financing, the broker suggests.
The new FY17 guidance for EBITDA is now $365-375m, around 16% below prior guidance. UBS observes half of the downgrade relates to an accounting review and the other half to genuine underperformance in operations.
The company has undertaken a lot in the last 18 months, Macquarie observes, including mergers and acquisitions of Amcom, CallPlus, M2 and NextGen. This is occurred against the backdrop of a rapidly evolving Australian fixed line market due to the roll out of the NBN.