Australian firm to buy NPDC's stake of Powerco for $360m

10.00am

Australian firm Prime Infrastructure is to buy a 53 per cent stake in listed energy firm Powerco in a $360 million deal previously owned by the New Plymouth District Council, Taranaki Electricity Trust and Powerco Community Trust.

Prime would buy the stake at $2.15 a share.

Of the $360m, 62.5 per cent would be in cash, while 37.5 per cent would be in high-yield securities with an interest rate of 8.5 per cent. Powerco said it anticipates it will receive a takeover offer from Prime.

It would get an independent assessment on the offer.

Prime was set up 18 months ago by investment bankers Babcock and Brown to own infrastructure assets.

Its 53 per cent stake came after it bought the blocks owned by the council, Taranaki Energy Trust and Powerco Wanganui Trust.

New Plymouth mayor Peter Tennent said the council had obtained a "good premium" for its 38.16 per cent stake.

"We will now spread our investment, reducing our risk while seeking to achieve annual returns that will at least maintain, and possibly exceed, the dividend levels we could have expected from Powerco," he said.

Mr Tennent said the price realised for the council's Powerco shares was at a 27.2 per cent premium from August 1, 2003.

"With the 8.5 per cent securities, we'll need less than a seven per cent return from the cash element in order to achieve an annual return of $19.3 million - our most recent dividend from Powerco," he said.

The council's advisors, PricewaterhouseCoopers, said this return was achievable," Mr Tennent said.

Taranaki Energy Trust chairman Brian Jeffares said the sale process had been a long and challenging one.

"We are delighted then to announce the sale of our shares in Powerco to Prime and we believe the community (trust). . . will benefit greatly form the reallocation of our investment portfolio.

"In is now our intention to spread our investment opportunities and to maximise the large sum that we have received through the sale."

Powerco Wanganui Trust chairman David Kemp was also pleased with the sale of its shares.

Prime would make its offer available to all Powerco shareholders.

- NZPA