4 August 2004

N E W S R E L E A S E

Powerco Sale Would Further Strengthen Council’s Financial Security - Standard and Poor’s

International ratings agency Standard & Poor’s believes the impressive credit quality of New Plymouth District Council would be increased even further by a sale of its shares in Powerco.

In a 30 July industry report card on New Zealand public sector entities, rating specialist Rick Impala says: “Standard & Poor’s expects New Plymouth District Council’s very strong credit quality to strengthen further as the risk from generating large additional non-core revenue (interest income and dividends) is reduced because the council is intending to diversify its investment portfolio through new investments, while maintaining their current level of income.”

Mr Impala also notes the council’s desire to ‘diversify its investment base while crystallising the value of its investment (in Powerco) as part of a takeover process’.

Mayor Peter Tennent says: “This announcement shows that a world leader in independent credit ratings has great faith in the structures set up to professionally manage our investments, and in particular our unanimous decision to consider selling our shares in Powerco.

“We firmly believe that diversifying our investments is the right way forward, if we can sell at the right price, and Standard and Poor’s is clearly of the same view.”

Standard and Poor’s currently rates New Plymouth District Council at ‘AA+’ long-term and ‘A-1+’ short-term. The ‘AA+’ rating is the highest afforded any council in New Zealand.

The council hopes to confirm the outcome of the sale process within a few days of closure of final bidding at 5pm on Friday 6 August. ‘We hope to make an announcement soon and we remain confident of a good premium on our shareholding,” says Mayor Tennent.

“On the subject of premiums, it’s important to remember that share prices observed after takeover/sale announcements reflect the value of a control premium expected to be paid by an acquirer. Therefore, in order to make reliable comparisons, it is vital to use pre-announcement prices averaged over a significant period of time, probably 12 months.”

About Standard & Poor’s Standard & Poor's is one of the world’s pre-eminent providers of independent credit ratings, indices, risk evaluation, investment research, data and valuations. A copy of its 30 July industry report card on New Zealand public sector entities can be found at www.standardandpoors.com.au.

ENDS

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