AGL ups NGC stake to 71.1pc

By Mark Reynolds

Australian Gas Light Company has upped its stake in Natural Gas Corporation to 71.1 per cent, but the Sydney-based energy company contends a full takeover offer is not in the wind.

"We don't have any other plans to buy out the minorities," insisted AGL chief executive Len Bleasel. That insistence came despite AGL yesterday picking up a further 4.9 per cent block of NGC, on top of the one-third stake it had agreed on Tuesday to buy from Fletcher Challenge Energy. AGL already held a one-third stake in the company.

The price it will pay Fletcher for its shares has yet to be determined, but it is now likely to be close to the $2 a share at which yesterday's big stake went through. At that price, Fletcher would receive more than $260 million for its holding. AGL did not disclose who had sold the 4.9 per cent holding, but the BusinessHerald has been told it was Auckland electricity company Vector, which is the electricity lines company that used to be part of Mercury Energy. Mercury built up the stake when it was ambitiously trying to expand in the mid 1990s. The sale yesterday was worth about $39 million.

While Mr Bleasel dismissed the prospect of a full takeover offer for NGC, sharebrokers see it as a logical step. That was because AGL wanted to expand its retail energy operations in New Zealand and that might not be the favoured direction for NGC's 8,000 minority shareholders, who mainly bought into the company when it was primarily a gas transmission and processing company.

Mr Bleasel said AGL's intention was to grow NGC's energy business and having Fletcher off the company's share registry would make that easier. That was because Fletcher's movements in the gas industry were hampered by it already having significant investments in upstream gas assets, which meant NGC had in the past encountered competition law barriers when it looked to buy further assets.

NGC shares closed 14c higher at $1.85 yesterday, while Fletcher Energy slipped 10c to $5.00. AGL shares fell 5Ac to $A9.69.