Capital raise still doesn't quell the uncertainty but stock remains cheap towards the lower end

QUICK NOTE: Time to reload - but this time round limited risk will likely lead to limited returns

Origin to IPO Conventional Gas Fields to Accelerate Debt Reduction

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Equity Capital Markets

<ul><li>Origin Energy has a gearing problem, rather than a liquidity or earnings problem.</li><li>The AUD 2.5 billion capital raising and other initiatives should contribute an additional AUD 7 billion in capital to the company by fiscal 2018, relative to the position at 30 June.</li><li>Most of this capital will be raised in fiscal 2016 and will significantly improve gearing metrics, enabling the investment-grade credit rating to be maintained.</li><li>This should alleviate investor concerns and share price weakness.</li><li>Despite a 34% reduction in our fair value estimate to AUD 7 per share, the entitlement offer, at AUD 4 per share, offers significant value. For this reason, as well as to avoid significant dilution, we recommend investors subscribe for their entitlements.</li></ul>Analyst: Gareth JamesFull report below the fold...

Origin Energy has a gearing problem, rather than a liquidity or earnings problem.The AUD 2.5 billion capital raising and other initiatives should contribute an additional AUD 7 billion in capital to the company by fiscal 2018, relative to the position at 30 June.Most of this capital will be raised in fiscal 2016 and will significantly improve gearing metrics, enabling the investment-grade credit rating to be maintained.This should alleviate investor concerns and share price weakness.Despite a 34% reduction in our fair value estimate to AUD 7 per share, the entitlement offer, at AUD 4 per share, offers significant value. For this reason, as well as to avoid significant dilution, we recommend investors subscribe for their entitlements.Analyst: Gareth JamesFull report below the fold...

Origin Energy Blinks First, but Entitlements Offer Value