NGC Receives Short-term Funding Support
22 June 2001
NEWS MEDIA RELEASE
NGC Receives Short-term Funding Support from Majority Shareholder
Natural Gas Corporation Holdings Limited (NGC) said today it has received short term funding support from its majority shareholder, The Australian Gas Light Company (AGL), to help overcome the effects on NGC’s cashflows of the record high wholesale electricity prices.
NGC Managing Director, Mr John Barton, said AGL has agreed to provide a guarantee to the New Zealand Electricity Market (NZEM) in respect of NGC’s energy purchase commitments, for up to $177 million. NGC has indemnified AGL for any obligations AGL incurs under the guarantee. Mr Barton said AGL had also agreed to make available to NGC funding of up to $65 million to assist NGC meet its short term cashflow requirements. AGL has the discretion to increase this amount to $100 million. The NGC Group will guarantee this loan.
The arrangements reached with AGL are on commercial arm’s length terms and have been put in place following the granting by the New Zealand Stock Exchange Market Surveillance Panel of waivers from the related party transaction provisions of the Listing Rules.
The Panel agreed to the waivers on the ground that the sudden and unexpected increase in the wholesale electricity price had significantly affected NGC’s short term cashflow requirements and additional immediate guarantee support and funding were needed. The Board of NGC (excluding the AGL appointees as interested parties) considers these transactions to be in the best interests of all shareholders.
The arrangements will require NGC shareholders’ approval at NGC’s next annual meeting, scheduled for 30 October 2001, if they are still in place at that time.