CANBERRA: Origin Energy is preparing to raise $2.5 billion in a rights issue. The four shares at $4 each for every seven offered will raise cash to strengthen the energy producer’s balance sheet in the face of falling oil prices.
The offer is a 34.4% discount to yesterday’s closing price. Part of the company’s plans for survival in a low commodity price world is to cut 800 jobs by the 2017 financial year, reduce cash costs by $200 million and selling off $800 million of non-core assets.
Origin last month announced a $658 million annual loss. Before writedowns, underlying profit was $682 million, a 4% rise. Managing director Grant King says Origin has narrowed its focus to its two core Australian-based businesses, Energy Markets and Integrated Gas.
“Origin’s energy markets business has a track record of producing strong and stable cash flows,” he says. Australia Pacific LNG, in which Origin has a 37.5% interest, is on track to produce its first LNG in November.
