UPDATE: Trustpower targets King Country retail business
(Recasts and adds detail from takeover offer)
By Paul McBeth
Dec. 7 (BusinessDesk) - Trustpower is eyeing up King Country Energy's retail business, as it teams up with King Country Electric Power Trust to buy out the remaining minority shareholders.
The Tauranga-based utility company will form an unincorporated joint venture with the trust, which owns 19.98 percent of King Country Energy, which will then make a takeover offer for the central North Island electricity generator and retailer, it said in a statement. The $5 a share offer is a premium to the $4.50 the shares last traded at on the Unlisted exchange before being halted on Dec. 3.
Trustpower and the trust plan to delist King Country Energy from Unlisted, install their own board, and assess whether the North Island power company should sell its retail business, the notice of takeover says.
The deal will see Trustpower, via a holding company, pay for all shares acquired by the joint venture, while the trust will pay for the new entity to acquire its own shares. If they get over the 90 percent threshold to trigger mop-up provisions, Trustpower's holding company will assess whether the King Country retail business should be sold. Provided that decision comes within six months of the takeover being completed, it will enter into a sale and purchase agreement with Trustpower.
Trustpower first mounted a takeover for King Country Energy in 2015, using a two-tier pricing scheme offering $5 per share if it reached at least 70.2 percent, or $4.78 if it fell short of that mark. It ultimately attracted a 65 percent stake, including Todd Corp's Nova Energy holding.
King Country Electric Power Trust rejected Trustpower's offer in 2015, saying at the time it saw the holding as a cornerstone investment and regarded Trustpower as an "excellent partner" for the power company. Earlier this year the trust reviewed its interest and decided to keep it.
Trustpower shares slipped 0.5 percent to $5.95 and have jumped 26 percent this year, outperforming other electricity generator and retailers on the S&P/NZX 50 index which have gained between 14-and-17 percent.
King Country Energy's board formed an independent committee made up of chair Toby Stevenson, Linda Robertson and Brian Needham to consider the offer. It's applied to the Takeovers' Panel to appoint Simmons Corporate Finance to prepare an independent adviser's report, and has hired West Coast Capital as a financial adviser and Harmos Horton Lusk as legal adviser.