King Country Energy rejects Trustpower two-tier offer

King Country Energy independent directors reject two-tier Trustpower offer

By Pattrick Smellie

Nov. 25 (BusinessDesk) - The independent directors of King Country Energy are urging the company's 6,000 independent shareholders to reject Trustpower's two-tier takeover offer, saying the whole offer should be pitched at $5 a share irrespective of uptake.

Trustpower is pitching its offer at $4.78 per share for acceptances between 50.1 percent and 70.2 percent of KCE's shares, and at $5 per share if more than 70.2 percent, excluding any acceptances received from the King Country Electric Power Trust, which holds 19.98 percent of KCE's shares and has already indicated it will not be participating in the offer.

Nova Energy, a subsidiary of Todd Energy, has already said it will accept the offer for its 54.07 percent holding.

However, independent chairman Toby Stevenson recommended against acceptance "unless the offer price is increased to $5 regardless of the level of acceptances", following an independent adviser's report that put the value of the shares at between $4.62 and $5.90 apiece.

The target company statement, which will be issued early next week, will show that the independent directors asked Trustpower to amend their offer and that the request was declined.

"The independent committee notes that a 70.02 percent shareholding in KCE does not provide Trustpower with any more legal control over KCE than a 54.07 percent shareholding, so $5 per share does not represent a premium for control," Stevenson said.

KCE shares, which trade on the Unlisted platform, last changed hands at $4.31 on Nov. 9.

The company has around 17,000 retail customers and several small hydro power stations.

NZX-listed Trustpower shares fell 2.7 percent $7.49.

(BusinessDesk)

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