Strong Interest In Applications For Capital Bonds
Monday, May 20, 2002
Powerco Reports Strong Interest In Applications For Capital Bonds
Powerco Chairman Barry Upson today reported strong interest in and demand for Powerco’s Capital Bonds.
The $5 million Priority Pool for applications by Shareholders and existing Bond Holders, for which applications closed on 17 May, was oversubscribed by more than 140%. Total subscriptions exceeded $12.3 million with 913 individual applications.
Mr Upson said the Board believed the oversubscription for the Capital Bonds was a positive reflection on Powerco’s recent financial results and the company’s history of growth through mergers and acquisitions over recent years.
A scaling process for the over subscription in applications to the Priority Pool has been implemented to complete this first phase of the bond issue. All existing Powerco investors who applied for $9,000 or less will be allocated $5,000 from the Priority Pool, and all those who applied for more than $9,000 will be allocated $6,000 from the Priority Pool.
Mr Upson also provided an update on Powerco’s request for a ruling from the Inland Revenue Department in respect of the tax treatment of the amalgamation between CentralPower and Powerco in September 2000.
In the Investment Statement and Prospectus relating to the Capital Bonds issue, Powerco advised that it had applied for a binding ruling in respect of the treatment of the amalgamation as a non-qualifying amalgamation for tax purposes.
On 15 May the Inland Revenue Department expressed a tentative view on one issue only of the application. The tentative view on that one issue was unfavourable, and the IRD has invited Powerco to lodge further submissions on that point. There are two other issues involved in the binding ruling application upon which no view has yet been expressed by the Department.
“Powerco remains confident that a favourable outcome will be obtained and has received confirmation that the strong supporting opinions and advice that Powerco has received from specialist tax advisers and senior legal counsel specialising in commercial tax issues, remain unchanged,” Mr Upson said.
The Lead Managers and Co-Managers report strong interest throughout New Zealand for the Capital Bonds issue which closes on Wednesday 29 May. The Company and it’s advisers are particularly pleased with the strong support from existing investors and that all applications to the Priority Pool were able to be satisfied at least to the level of the minimum application amount of $5,000.
Powerco is New Zealand’s third largest electricity and gas distribution utility with around 205,000 customers connected to networks in Taranaki, Wanganui, Rangitikei, Manawatu, Wairarapa and Wellington, and has more than 16,000 shareholders.