Council confirmation of ‘attractive’ offer

21 October 2004

Council pleased with confirmation of ‘attractive’ offer

New Plymouth District Council is pleased to learn that the board of Powerco believes the takeover offer from Prime Infrastructure is ‘attractive’ to shareholders.

The council is also pleased that Powerco’s independent adviser Grant Samuel values Powerco shares in a range of $1.81 to $2.12 per share. The mid point of this range is $1.96 whereas the council will receive $2.15 for its shareholding - confirming the favourable deal secured.

Mr Bublitz adds that the council is not concerned by Grant Samuel’s valuation of Prime Infrastructure SPARCS.

He says: “We always anticipated that the independent adviser's report would be conservative. At the end of the day this is merely one opinion and the council took its own expert advice on the likely market value of the SPARCS prior to agreeing to accept them.

“Since obtaining that advice, we have heard the views of a number of other financial experts which tell a completely different story to Grant Samuel – not least those of investment bankers Northington Partners which, in an independent report included in the Powerco takeover offer, valued the SPARCS at between $0.94 and $1.08 each, the mid-point of this range being $1.01.

“Another example is of course the Australian broker Tricom, which has agreed to purchase any excess SPARCS we may receive in the Powerco deal for $1 each.

“Tricom is willing to purchase up to $50 million of the SPARCS and has provisionally placed many of these SPARCS with its client base.

“You don’t commit yourselves to an outlay of that magnitude unless you are very confident it will be a financial winner.

“Regardless of the perceived value of the SPARCS, they will provide us with an 8.5 per cent return for the next five years, and they will be tradeable.”

Mr Bublitz also confirmed the council’s pleasure at today’s announcement that Finance Minister Michael Cullen has approved the sale of Powerco to Prime Infrastructure.

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