SMS Finance

Origin offers special dividend

AustralianSuper has made it clear it is going to remain a big shareholder in Origin Energy (ASX:ORG), whether the bidders – Brookfield from Canada and EIG from Australia – like it or not.

At the same time, Origin also offered shareholders a special dividend to try and bribe them into voting for the merger at the meeting in 10 days’ time.

But that depends upon the deal being done, and it won’t be paid for another two months.

The two bidders (along with Origin, its board and management) have kickstarted a campaign to try and wins the votes of Origin shareholders by insinuating that the super fund’s opposition will delay the transition to renewable energy in Australia, see less spent on renewable and green energy projects and see the group lose money by being a stranded investor.

The duo, it now transpires, even offered assets in Origin if it dropped its opposition.

“Nix” said Origin, which issued a statement on Monday revealing the “unsolicited letter” received from the partners and its offer.

Instead AustralianSuper reaffirmed its opposition to the bid and said it will be voting its 15.3% shareholding against the offer of $9.53 a share.

“The letter contained an offer for AustralianSuper to engage with the consortium in relation to acquiring interests in Origin should the takeover scheme on the terms proposed in Origin’s scheme booklet dated 19 October 2023 (as amended on 2 November 2023) be successful.

“AustralianSuper’s position is unchanged on the upcoming vote on 23 November 2023 as we believe the offer remains substantially below our estimate of Origin’s long-term value.

“The Fund will be voting against the takeover scheme from the Brookfield and EIG-backed consortium as AustralianSuper believes the ongoing energy transition has further enhanced the value of strategic energy transition platforms, such as Origin.

“AustralianSuper is a long-term investor in the Australian economy and is open to providing capital to assist Origin as it prepares to transition over the coming decades, while delivering on our purpose to help members achieve their best financial position in retirement.

“The challenge facing the nation as we work towards Net Zero by 2050 is not a lack of capital but rather a shortage of good quality investment opportunities< “ AustralianSuper added.

Meanwhile the Origin board has determined to pay a fully franked special dividend of 39 cents per share. This equates to a 4.5% dividend yield based on where Origin shares finished last week.

If the takeover is approved by Origin shareholders at its scheme meeting, and the required court and regulatory approvals are obtained, the special dividend is expected to be paid on 23 January.

The dividend is part of the offer from Brookfield and EIG (and supported by Origin).

The proposed takeover’s total cash payment to shareholders of approximately $9.531 per Origin share comprise scheme consideration of $6.20 per share, scheme consideration of $US1.86 per share and the fully franked special dividend of 39 cents per share.

That full franked special dividend is really an asset for Origin shareholders to access, not for the bidders’ use to reduce the financing costs of their cash offer.

The special dividend news helped push Origin shares up 1.5% on Monday to $8.78, still well under the offer price. 

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