Trustpower's headquarters on Durham St. Photo / George Novak
More than 450 Tauranga workers face months of uncertainty as major city employer Trustpower considers selling its retail business.
Trustpower announced a strategic review of its retail electricity, gas and broadband business yesterday.
The announcement also put a question mark over the future of "TECT cheque" rebates from the Tauranga Energy Consumer Trust, a 26.8 per cent shareholder in Trustpower.
Trustpower, headquartered in Durham St, said its review would test market interest in the business "while also exploring the merits and business case to establish a standalone generation business".
Changes to the retail energy markets were the primary driver of the review.
Trustpower shares dropped on the news, down 25c to $8.51 at 11.30am, but rebounded in the afternoon.
Infratil, majority owner of Trustpower - and itself the subject of takeover interest - supports the review.
Trustpower is New Zealand's fifth-largest electricity company with 231,000 retail customers - about 48,000 in Tauranga.
Of its 800 staff nationwide, 460 work in the retail business in Tauranga.
Trustpower chief executive David Prentice said staff were told of the review immediately after it was announced to the NZX.
The company was holding drop-in sessions where staff could ask questions.
"It will no doubt be a rollercoaster for many of our staff. Depending on what your outlook is on life, depending on where you are, you will view this news today very differently. It's impossible to take a broad brushstroke to that."
It was "very premature" to assume the strategic review would go through to a sale, he said, and any impact on jobs would depend on the buyer.
If a sale went ahead, he expected any potential acquirer would see a "huge amount of value in the capability and skills that we've got in our staff here".
He said the company would be "upfront and transparent" and "seek to provide support to not just our staff but consumers and communities as we work through this process".
"That's really all we can guarantee at present."
Regardless of if the sale went ahead, Trustpower would still have a large staff presence in Tauranga.
"We will be retaining our generation business as well as our industrial consumer customer base so we will still have a requirement for a large number of staff in central Tauranga."
Prentice committed to keeping the generation business headquartered in the city.
Chief financial officer Kevin Palmer estimated 20-25 per cent of staff worked in generation, responsible for three-quarters of its profit.
He expected interest from the market in New Zealand and abroad and from other industry players and investors.
The strategic review is expected to take months and no decision will be made to sell or retain the retail business until it was done.
Trustpower chairman Paul Ridley-Smith said the strategic review would have "fundamental implications" for TECT.
TECT said the trust was warned of the review, as a sale of the retail business would require changes to the structure of the trust.
"Trustees are well advanced in developing a proposal that outlines the changes to TECT's structure needed to meet the purpose of the trust deed, and to ensure that the best interests of the trust and its beneficiaries are protected.
"In particular, trustees are focused on protecting the TECT rebate for existing beneficiaries."
TECT said it would update beneficiaries on the proposed changes soon, with a consultation process to follow.
The trust confirmed "existing beneficiaries" were "current Trustpower customers in the Western Bay of Plenty and Tauranga (the TECT district)".
It's not yet clear what would happen if Trustpower no longer had customers, or had only a handful of big ones, and TECT declined to make further comment yesterday.
Nigel Tutt, chief executive of Tauranga economic development agency Priority One, said Trustpower was one of the 10 largest employers in Tauranga.
"Importantly, they are high-value jobs.
"They are a really important local business and employ a lot of staff in the city and are a very good company to have in the region."
The impact on jobs in a sale would depend on the buyer, he said.
"If it was sold to a trade customer, there may be some implication on jobs because presumably, they would pursue some kind of synergy or efficiency, but that's not the only option. Someone new could buy it potentially, and it could be left as is.
"The concern from a regional point of view would be that it may impact those jobs. Equally, we know it's a good business that operates really well, so there could be a case for leaving it as is.
"Tauranga would potentially be an attractive place to base staff for a potential new owner."
Tauranga Chamber of Commerce chief executive Matt Cowley said Trustpower had long been a "critical leader in the Tauranga business community".
"It would be a massive loss to the city if the company left the community.
"Trustpower provides many quality jobs for skilled residents that are not readily available in our local business community and for the surrounding eateries and retailers in the CBD, a large portion of their customers include corporate staff, such as Trustpower."
He did not believe those were the intentions of the review, saying the company's statement suggested it was trying to get into a strong position for the future, in a changing energy sector.
He said it would be "very interesting" to see if TECT made any direction changes.
Former TECT trustee of 12 years to 2018, Ron Scott, said a sale was one reason the trust looked a few years ago at converting TECT into a community trust that issued grants rather than dividends.
That option was "absolutely rejected" by beneficiaries who "made it clear they expected to have some individual returns".
In his view, this situation would be a "dilemma" for trustees.
TECT was created in 1993 when the Tauranga Electric Power Board became Trustpower and all Tauranga and Western Bay residents became Trustpower customers by default. The TECT Charitable Trust followed in 2002.
According to its 2020 annual report, diversified investments now make up about 40 per cent of its portfolio, with the rest in Trustpower.
It distributed $9.74m in grants and $46.8m to beneficiaries. Since 1993 it has distributed $562.8m.
- Additional reporting Hamish Rutherford
Jefferies and family will enjoy a leg of lamb with summer sides.