Prime Infrastructure Announces Agreement
9 August 2004
Prime Infrastructure Announces Agreement To Acquire Majority Stake In Powerco Limited
New Plymouth 9 August 2004: Prime Infrastructure today announced its selection as the preferred bidder for the acquisition of 53.65% of the issued share capital of Powerco Limited (NZSX: “PWC”), New Zealand’s second largest electricity and largest gas distribution utility.
Prime Infrastructure has signed a conditional Lock-In Agreement to purchase the shares from the New Plymouth District Council, Taranaki Electricity Trust and Powerco Wanganui Trust at NZ$2.15 per share.
Prime Infrastructure will now commence preparation of a Takeovers Code compliant Takeover Offer (“Offer”) for all Powerco ordinary shares and unsecured subordinated capital bonds on issue, representing a total enterprise value (excluding transaction costs) of approximately NZ$1.815 billion (A$1.65 billion). It is intended that the Offer will be posted to Powerco shareholders and bondholders within the next 6 weeks.
The offer price of NZ$2.15 per share represents an attractive premium to the pre-announcement price; approximately a 21% premium to the 12 month average pre-announcement price and approximately a 23% premium to the Net Tangible Asset backing. The Offer delivers to all Powerco shareholders, including NPDC, a premium of 27.2% when compared to the share price on 1 August 2003.
Prime Infrastructure’s CEO, Chris Chapman, CFO Jeff Pollock and CEO of Babcock & Brown Investor Services Limited, Peter Hofbauer, in New Plymouth for the announcement, said that the offer had been pitched at a level to gain Powerco shareholder acceptance.
“We believe that it is an Offer that will be very attractive to all Powerco shareholders, as evidenced by the acceptance of the majority shareholders for their controlling stake. We consequently are expecting a strong take-up of the Offer,” Mr Chapman said.
Mr Chapman also advised that Prime Infrastructure will not acquire any Powerco shares or unsecured Powerco capital bonds at a price higher than the price under the Offer for a period of at least 12 months from the date of the Offer.
Mr Chapman said Prime Infrastructure’s move to acquire Powerco was a vote of confidence in Powerco’s management, staff and asset quality and that Powerco would be retained in its current form as a strategic asset for Prime Infrastructure, which has no other holdings in New Zealand.
Prime Infrastructure confirmed its intention to seek appropriate Board representation, and that it would be seeking an active participation in the running of the company
“This is a strategic investment for us in New Zealand and we are committed to ownership of Powerco for the long term. Our current intention is to retain Powerco’s Head Office in New Plymouth, and we are supportive of Powerco’s business plan and growth ambitions,” he said.
Prime Infrastructure proposes to incorporate a subsidiary in New Zealand to make the Offer, which will be funded by a combination of debt and equity raised in Australia and debt securities issued in New Zealand (“Prime Infrastructure SPARCS”). The Prime Infrastructure SPARCS will be convertible into Prime Infrastructure securities in certain circumstances. The Prime Infrastructure SPARCS will be offered under a Prospectus and Investment Statement that will accompany the Offer.
“The Prime Infrastructure SPARCS have been structured to broadly replicate the current returns received by Powerco shareholders. We believe that Powerco shareholders will consider the security as an attractive opportunity, as the Vendors have done by accepting a large proportion of their consideration in this way,” said Mr Chapman.
Prime Infrastructure will today lodge with the Australian Securities and Investment Commission (ASIC) a Product Disclosure Statement and Prospectus for an approximately A$187.3 million, fully underwritten, Entitlement Offer to existing Prime Infrastructure shareholders.
Mr Chapman also said the deal reflects Prime Infrastructure’s confidence in the local economy and growth prospects of New Zealand. “That confidence is further supported by Prime Infrastructure’s planned listing on the NZSX. The listing will give New Zealanders the opportunity to participate as security holders in Prime Infrastructure via the NZX listing and/or Prime Infrastructure SPARCS.”
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The Powerco acquisition is subject to the satisfaction of a number of conditions as set out in the Lock-In Agreement. These conditions include approval for the investment by the Overseas Investment Commission. Although Prime Infrastructure has no reason to believe that the Acquisition will not proceed, there can be no certainty that the conditions will be satisfied. - ends -
For further information contact: Trish Sherson, Raynish & Partners, Communications Consultants, Phone (09) 309 6663 or 021 570 803 or email: firstname.lastname@example.org
About Prime http://www.primeinfrastructure.com.au
Prime Infrastructure comprises Prime Infrastructure Management Limited ("PIML") and Prime Infrastructure Trust ("PIT"). Babcock & Brown Investor Services Limited ("BBIS") is the Responsible Entity for PIT. An investment in Prime Infrastructure is a stapled security comprising a share in PIML and a unit in PIT.
Prime Infrastructure is an ASX listed investment vehicle that focuses on identifying and acquiring quality infrastructure investments in Australia and internationally. It presents an opportunity for investors to participate in the ownership of infrastructure assets. Prime Infrastructure’s charter is to invest in and manage infrastructure investments in Australia and overseas. Its strategy is to invest in strategically important assets arising from Government privatisations, public-private partnerships and private sector acquisitions.
Prime Infrastructure was listed on the ASX in June 2002, with its initial asset being a 100% interest in the 99-year lease of one of the largest coal export terminals in the world, the Dalrymple Bay Coal Terminal (“DBCT”) in Queensland, Australia. DBCT was acquired by a consortium led by investment bank Babcock & Brown in September 2001, for a total in excess of A$830 million of cash, assumed liabilities and commitments.
Prime Infrastructure has outperformed the ASX 200 Accumulation index by 30% since listing.
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Currently, Prime Infrastructure has an enterprise value of approximately A$1.325 billion and a market capitalisation of approximately A$545 million.
Since listing, Prime Infrastructure has embarked on a power asset aggregation strategy.
In February 2003, Prime Infrastructure co-bid and underwrote 50% of the equity required to acquire the 960MW Ecogen power assets (namely the Newport and Jeeralang Power Stations) in Victoria from the AES Corporation. More recently, in June 2003, Prime Infrastructure acquired a 50% stake in the coal–tailings fired Redbank Power Station in the
Hunter Valley of NSW. Since the acquisitions were completed, both assets have been performing in-line with expectations.
In December 2003, Prime Infrastructure announced the acquisition of a 50% interest in Global Wind Partners (“GWP”). GWP’s first investment is the first stage of the 230MW Lake Bonney Wind Energy Project in South Australia. The first stage of the project is already nine months into construction and is expected to be completed in the first quarter of 2005. Prime Infrastructure is confident of having an investment in 500MW of wind generation capacity in its portfolio within the next 3 years.
About Powerco http://www.powerco.co.nz
Powerco is New Zealand’s second largest electricity and largest gas distribution utility with around 400,000 consumers connected to its networks. Powerco’s electricity networks are in Tauranga, Thames, Coromandel, Eastern and Southern Waikato, Taranaki, Wanganui, Rangitikei, Manawatu and the Wairarapa. Its gas pipeline networks are in Taranaki, the Hutt Valley, Porirua, Wellington, Horowhenua, Manawatu and Hawkes Bay.