Local Govt | National News Video | Parliament Headlines | Politics Headlines | Search


Australian Investor Purchases Powerco Shares

9 August 2004

Australian Investor Purchases Powerco Shares

New Plymouth District Council will sell its stake in Powerco for NZ$2.15 per share, securing a premium of more than 21.5 per cent on pre-announcement prices.

The buyer, Australian investor Prime Infrastructure (Prime), will also purchase the shareholdings of Taranaki Electricity Trust (TET) and Powerco Wanganui Trust (PWT), thereby obtaining over 53 per cent of Powerco shares.

Mayor Peter Tennent says: “This agreement is good news for the ratepayers of this district.

“We have secured a good premium for our 38.16 per cent holding and we now have a large sum to reinvest in a diversified portfolio.

“We will now spread our investments, reducing our risk while seeking to achieve annual returns that will at least maintain, and possibly exceed, the dividend levels we could have expected from Powerco.

“This agreement is absolutely the right way forward. It is the result of receiving high-quality professional advice and adopting a long-term and unemotional view of our investment in Powerco.”

Deal details

The transaction consists of 62.5 per cent cash and 37.5 per cent of high yield securities. The securities are perpetual and carry an interest rate of 8.5 per cent, to be reset every five years.

The price paid by Prime represents a 21.5 per cent premium to Powerco’s dividend-adjusted average market price over the 12 months preceding the sale announcement.

The offer delivers a premium of 27.2 per cent when compared to the share price on 1 August last year.

Mayor Tennent adds: “With the 8.5 per cent securities, we’ll need less than a seven per cent return from the cash element in order to achieve an annual return of NZ$19.3 million – our most recent dividend from Powerco.


“Our advisers PricewaterhouseCoopers say that, for a non-tax paying organisation such as ourselves, this will not be difficult to achieve with a diversified and fairly conservative investment portfolio.

“Also, given that Powerco’s post-tax dividends to the council, as a non-tax paying entity, may well begin to tail off in the near future, we have clearly put ourselves and the community in a position of greater financial strength and reliability.

“We have been advised that we simply cannot rely long-term on receiving the same post-tax dividend levels from Powerco that we have enjoyed in the past.

“PricewaterhouseCoopers have also told us that Powerco’s current non-tax paying position is not sustainable. The result of this is that in future it may well pay its dividends two-thirds in cash and one-third in tax imputation credits.

“As the council is a non-tax paying organisation these imputation credits will be worthless to us. On current dividend levels this could mean us losing over six million dollars and only receiving a dividend of NZ$12.8 million.

“Quite simply, falling Powerco dividends such as this mean rising rates and this is not a situation we are prepared to contemplate. So, we have acted now to stabilise our long-term financial security.

“This sale means much less risk and much more chance of consistently high returns from our investments.”

TET chairman Brian Jeffares says: “The process has been a long and challenging one, and one that has exercised our minds for some time.

“We are delighted then to announce the sale of our shares in Powerco to Prime and we believe the community of the Taranaki Electricity Trust will benefit greatly from the reallocation of our investment portfolio.

“It is now our intention to spread our investment opportunities and to maximise the large sum that we have received through the sale. For us it is business as usual and we look forward to working with the community of Taranaki Electricity Trust in the future.”

PWT chairman David Kemp says: “This trust joined the sale process as we no longer wished to have all our investment tied up in a single company. We are delighted with the transaction and look forward to diversifying our portfolio.”

Prime Infrastructure will make its offer available to all Powerco shareholders in accordance with the provisions of the Takeovers Code.


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines


Breed Laws Don’t Work: Vets On New National Dog Control Plan

It is pleasing therefore to see Louise Upston Associate Minister for Local Government calling for a comprehensive solution... However, relying on breed specific laws to manage dog aggression will not work. More>>


Corrections Corrected: Supreme Court Rules On Release Dates

Corrections has always followed the lawful rulings of the Court in its calculation of sentence release dates. On four previous occasions, the Court of Appeal had upheld Corrections’ practices in calculating pre-sentence detention. More>>


Not Waiting On Select Committee: Green Party Releases Medically-Assisted Dying Policy

“Adults with a terminal illness should have the right to choose a medically assisted death,” Green Party health spokesperson Kevin Hague said. “The Green Party does not support extending assisted dying to people who aren't terminally ill because we can’t be confident that this won't further marginalise the lives of people with disabilities." More>>


General Election Review: Changes To Electoral Act Introduced

More effective systems in polling places and earlier counting of advanced votes are on their way through proposed changes to our electoral laws, Justice Minister Amy Adams says. More>>

Gordon Campbell: On Our Posturing At The UN

In New York, Key basically took an old May 2 Washington Post article written by Barack Obama, recycled it back to the Americans, and still scored headlines here at home… We’ve had a double serving of this kind of comfort food. More>>


Treaty Settlements: Bills Delayed As NZ First Pulls Support

Ngāruahine, Te Atiawa and Taranaki are reeling today as they learnt that the third and final readings of each Iwi’s Historical Treaty Settlement Bills scheduled for this Friday, have been put in jeopardy by the actions of NZ First. More>>


Gordon Campbell: On The Damage De-Regulation Is Doing To Fisheries And Education, Plus Kate Tempest

Our faith in the benign workings of the market – and of the light-handed regulation that goes with it – has had a body count. Back in 1992, the free market friendly Health Safety and Employment Act gutted the labour inspectorate and turned forestry, mining and other workplace sites into death traps, long before the Pike River disaster. More>>

Get More From Scoop



Search Scoop  
Powered by Vodafone
NZ independent news