TECT sells stake to broaden base

TECT chairman Bill Holland

Tauranga Energy Consumer Trust (TECT) has reduced its shareholding in Trustpower from 33.2 per cent to 26.8 per cent, generating gross proceeds of $155 million.

The sell-down frees up about 20 per cent of TECT's stake in Trustpower - previously its only shareholding - and will be used to diversify its investment base, says TECT chairman Bill Holland.

"It's a sound business decision in line with our strategic priority of ensuring prudent management of the trust's investment portfolio," said Mr Holland.

The sale would not affect the annual dividend payout to its consumers, or its grants programme, he said, adding that TECT was committed to maximising benefits for the consumers.

The move was foreshadowed two years ago when the trust received authority from TECT consumers to sell down to 26 per cent, if it considered a sale would be in the interests of the consumers. The 26 per cent holding meant TECT could still prevent any changes to Trustpower's constitution, which would require approval by 75 per cent of shareholders.

Mr Holland said TECT trustees retained their confidence in Trustpower.

"Trustpower continues to have excellent prospects and for this reason we remain committed to the company long term and have ensured our influence is retained," he said.

Trustpower chief financial officer Robert Farron welcomed the move, telling the Bay of Plenty Times there were advantages for both entities in diversifying. Trustpower's major shareholders have been TECT and Infratil, which has a 51 per cent holding.

As a consequence, the stock is considered to have low liquidity, especially given the increased number of utilities in the NZX as a result of the government's partial privatisation. Mr Farron noted that the sell-down gave institutional and retail investors new investment options.

"TECT remains a long-committed and happy shareholder of Trustpower," said Mr Farron.

"They're taking some prudent steps to diversify, but Trustpower is still going to make up around 80 per cent of their total portfolio after the sell-down."

"Demand for the Trustpower shares was strong," said TECT general manager Wayne Werder.

Craigs Investment Partners handled the book building and the shares went to a broad range of investors, mostly in New Zealand, he said.

TECT
TECT (Tauranga Energy Consumer Trust) was established in December 1993 under the Tauranga Electric Power Board Establishment Plan and is now one of New Zealand's largest energy trusts. TECT's income and capital is used to provide benefits to its consumers, who are largely made up of the Trustpower account holders in Tauranga City and the Western Bay of Plenty.