Ahead of the finalisation of the sale of a stake in Fortescue Mining's infrastructure assets, Aurizon - formerly Queensland Rail - has flagged the selldown of equity in its railway networks business, which could free up billions dollars of capital for acquisitions.
In the process, this sets the scene for the coal hauler and railway operator to emerge with a more rounded suite of infrastructure assets than it now holds.
Aurizon on Monday said it would restructure its finances so that $3 billion of its debt would be held against the assets of Aurizon Network, a fully owned unit.
The restructure would create a "transparent and sustainable financial structure" with debt placed directly against the regulated Central Queensland Coal Network, which would bring with it the ability to further diversify funding sources.
The new structure would allow it to "introduce a minority equity interest in Aurizon Network, allowing Aurizon to redeploy capital from the regulated business into either capital management initiatives or funding value-accretive growth projects to the extent that such opportunities are identified".
Along with the prospect of buying a minority stake in the infrastructure assets of Fortescue Mining, which is in the final stage of being negotiated, the refinancing comes as speculation surrounds the Queensland government selling its remaining equity in Aurizon.
Rather than this being placed into the market, Aurizon could have the option of buying and cancelling this block of shares.
In March, the Queensland government cut to 8.9 per cent from 18.2 per cent its shareholding in the company.
Aurizon is involved in a joint study with Atlas Mining and Brockman Resources for a new open-access rail line in the Pilbara in Western Australia, which is still being finalised.
Additionally, Aurizon has previously stated it is not interested in acquiring a minority interest in a venture, since it wants to use its operational skills in any new venture.
Macquarie Bank has told clients the Aurizon balance sheet was underleveraged and could support as much as $1.3 billion of additional borrowings.
"The capital spending demand outlook is diminishing as coal developments are paused and iron ore opportunities may disappear," it told clients in a note on Monday.
Aurizon could also lift its dividend without losing balance sheet flexibility, it said.
Even without a share buyback, the dividend could be raised annually to as much as 25¢ a share in fiscal 2015 and to 38¢ in fiscal 2016, it estimated.
Standard & Poor's has assigned a BBB+ rating to Aurizon Network, with a stable outlook.