Queensland govt sells Aurizon stake to raise A$806 mn

The Queensland government said that it will sell half of its 18.2-per cent stake in Australia's largest rail freight company Aurizon Holdings Ltd for approximately A$806 million ($834 million) to pay down the state's debt.

The government plans to divest 200 million shares, or about 9.3-per cent stake in Aurizon at A$4.03 each.

Through the sale, the Queensland's premier Campbell Newman aims to win back the 'AAA' credit rating of the state, which it lost in 2009, and return the budget to surplus in 2014-15.

"The A$806m sale represents a gain of around A$300 million to Queensland's bottom line since the initial public offer (IPO)," Queensland treasurer Tim Nicholls said in a statement.

The government expects to receive a dividend of 4.1 cents per share from Aurizon on the shares sold.

Proceeds from the sale are expected to be received by 21 March and the dividend on 27 March.

"While the government will continue to review its residual 8.9 per cent holding in Aurizon, we have no current intention to sell additional shares in the near term," the treasurer said.

Brisbane-based Aurizon, formerly known as QR National Ltd, was formed to operate freight services for coal, bulk and containerised haulage. The company, previously owned by the Queensland government, was floated in the Australian stock exchange through the country's second-largest public offering in 2010.

In 2011-12, Aurizon transported over 250 million tonnes of coal, iron ore, other minerals and agricultural products.

Although, the offer price is just 1 per cent below the closing price of A$4.07 for the stock on Friday in Sydney, analysts are of the opinion that the timing for the stake sale is not bad considering the stock market rally in recent months.

The shares have risen 58 per cent from their IPO listing, compared with an 11 per cent increase in the bench mark index S&P/ASX 200 during the period.

Earlier in October, the state had sold Aurizon stock worth A$1.5 billion to cut its debt load. A$1 billion of shares were sold to Aurizon through a share buy back, while the remaining A$500 million of shares were sold to institutional investors at A$3.47 a share.

According to media reports UBS AG is offering the shares to investors. Last month UBS sold a 2.5-per cent stake in Aurizon for around A$208 million, at A$3.87 per share.

Queensland largely depends on its mining industry to drive economic growth in the state, which accounts for about a-fifth of the country's gross domestic product (GDP). The state suffered flooding in January for the second time in two years which made a noticeable impact on the coal transportation.

Last week, Aurizon signed a deal with India's GVK Group to jointly develop rail and port infrastructure in Queensland. (See: GVK sells 51-per cent Hancock Coal stake to Aurizon).