Origin Energy is cutting dividends and issuing up to $2.5 billion in new, discounted shares as part of a massive effort to survive the oil price crash.
The company's $4.7 billion in new capital measures are aimed squarely at cutting debt, which is peaking above $13 billion at the same time oil prices stumble at six-year lows and financial markets endure huge volatility.
"These measures are not designed to make us okay just today, they are designed to make us okay today, tomorrow, next week, next month, next year and frankly almost whatever reasonably conceivable future one might imagine," managing director Grant King told reporters on Wednesday.
In addition to asset sales and spending cuts in the next two years, shareholders' dividends will be cut to 20 cents per share in each of those years, down from 50 cents in 2014/15.
Investors are also being asked to pay a 34 per cent discount for four new Origin shares for every seven they own, an offer that will dilute the value of their current shares, which have already plunged 62 per cent in the last year.
Mr King is confident investors will stand by Origin.
"They've been great supporters of the company, even though we've had to ask for shareholder support in respect of the equity raising and to recognise that for the next two years the reduction in dividend is appropriate," he said.
But CMC Markets chief strategist Michael McCarthy said shareholders will be extremely disappointed with the announcement, and Origin's handling of the oil price downturn.
"Those companies coming to market when share prices and energy prices are under severe pressure have shown a failure of management," he said.
"The fact that Origin is forced essentially into this position is a failure of foresight."
Origin's plans are aimed at preventing its credit status slumping to `junk' status, meaning an increased risk of default.
Both Standard & Poor's and Moody's said the moves will significantly strengthen Origin's balance sheet, even if the company fails to realise earnings from the $25 billion Australia Pacific LNG (APLNG) project, where production begins in November.
Mr King said that will not happen though, with the Gladstone, Queensland plant to prove a valuable investment even at low oil prices.
Origin made a loss of $658 million in 2014/15, due to an impairment related to previous efforts to strengthen its balance sheet, and it expects to incur up to $200 million in write-offs and impairments as a result of the new measures.
The company also said APLNG will deliver a loss of up to $220 million in 2015/16 as sales revenue is offset by expenses, financing and depreciation and amortisation.
ORIGIN ENERGY'S BIG PLANS TO OVERCOME OIL PRICE PLUNGE
* Raising $2.5b with offer of new shares to existing investors
* Cutting capital spending by $1b in next two years
* Cutting dividend over next two years to save $420m
* Selling up to $800m in wind, exploration and pipeline assets
* Exiting geothermal and international exploration activities
* Debt expected to be reduced below $9b by June 2017
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