The board of Envestra has formed a sub-committee to consider the proposal, however at this time do not make any specific comment on the likely outcome of this review.
From a credit perspective we note that Envestra bonds are raised at the asset level, rather than the corporate level so there is unlikely to be any effect on their trading. Further, we note that APA Group maintains the same credit rating as Envestra, so there is minimal risk of any change in the underlying rating (not-withstanding the enhancement provided by the credit wrap on the Envestra bonds would remain in place).
Overall, we would expect to see a slight strengthening of the overall company were the merger to proceed as corporate costs could be allocated across a broader asset base and APA have a proven record in the management of gas pipeline assets (as does Envestra).
Whilst there is a change of control clause in place in the Envestra bond documents in the favour of the finance providers, given the potential merger partner is of equal credit standing, we would not expect this to be excercised.