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Powerco Raises US$175 Million in US Debt Market

Powerco Raises US$175 Million in US Debt Market

Energy utility company Powerco announced today that it has raised US$175 million in a private placement of 11-13 year term senior debt to US institutional investors.

Powerco Chief Executive, Steven Boulton, said that the placement was oversubscribed and was issued on attractive terms and reflects the confidence that US investors have in Powerco’s outlook and strategy.

Mr Boulton stated that this financing was a very positive outcome for Powerco, which doubled in size with the acquisition of electricity and gas network assets from UnitedNetworks Limited late last year.

Mr Boulton said that the US placement does not increase Powerco’s existing level of debt but will replace some of the Company’s existing senior bank funding facilities, which were raised for the acquisition of the UnitedNetworks assets last year. The US financing is part of the lengthening of Powerco’s debt maturity profile following that acquisition. Powerco is in the process of reducing reliance on short-term borrowing to a more prudent mix of medium and long-term borrowing.

Mr Boulton said that the notes were fully swapped back into NZD. The financing has enabled the Company to diversify its funding sources into different markets, which offer longer maturity profiles.

Mr Boulton indicated that the Company was also looking to refinance in the near future some of the remaining acquisition funding raised last year with a further domestic issue of medium term notes in New Zealand.

International credit rating agency, Standard & Poor’s, acknowledged the benefits to Powerco of diversifying its funding sources and securing long term debt, when it affirmed Powerco’s strong BBB+/A2 credit rating in August 2003.

Note: The placement was jointly managed by Merrill Lynch and Commonwealth Bank of Australia.

Powerco is New Zealand’s largest gas distribution company and second largest electricity lines company. It has approximately 400,000 gas and electricity consumer connections in the central and lower North Island. Powerco is a publicly listed company, and is included in the NZX50.

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