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Origin Energy Restructure: A Move Towards Oil and Gas


Source: The Age 6/12/16

Origin Energy's new chief executive Frank Calabria has moved swiftly to assert his authority on the utility with a bold plan for a $1.8 billion-plus float of the oil and gas business that investors cautioned would need to fetch the right price to be deemed a success.

The proposed IPO of the conventional oil and gas business next year stops short of the full demerger that some Origin investors had been calling for but which wasn't feasible with the debt burden of about $9 billion.

Shares in Origin initially surged 5.3 per cent on the news, before softening to end up 2.5 per cent at $6.58, still the highest close since September 2015.

Standard & Poor's and Moody's both signalled the NewCo sale plan would be positive longer term for Origin, while confirming their existing ratings.

S&P noted the planned IPO "demonstrates Origin's commitment to realign its activities towards its core utility business, moving away from the more volatile and capital-intensive exploration and production segment".

The IPO still needs final board approval and could still be derailed by market conditions and other factors, Origin said.

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