Businessman sues Vector for $400m

A businessman has filed a $400 million claim against Vector Networks, alleging the Auckland-based lines company breached a joint venture agreement for a geothermal power station.

In papers filed at the High Court in Auckland before Christmas and released yesterday, Alistair McLachlan says the actions of Vector (then Mercury Energy Ltd) resulted in the loss of his business reputation and credibility.

He said he and his wife, Ava McLachlan, suffered distress and humiliation as a result of the failed deal. The couple have spent five years, millions of dollars and employed 34 consultants -- including eight lawyers -- to lodge their claim.

"This is a matter of justice. They've cost me millions of dollars," the 63-year-old from Taupo said.

The latest court saga began in 1994 when the McLachlans and Mercury Energy entered into a joint venture to develop a geothermal power station on 113ha the McLachlan family had farmed since 1965 on Poihipi Rd near Taupo. Approx 2sq km of the land was over Wairakei geothermal field. Steam from the field would be used to drive the 55MW generator.

A new company called Mercury Geotherm was formed. The McLachlans already had all the necessary consents, rights, licences, options, agreements and property to generate electricity. In return for their land and the geothermal rights, the McLachlans owned 49 per cent of the joint venture.

Mercury, which funded the plant and ran it after it was completed in 1997, owned 51 per cent and had an $80 million debenture over the assets. Building the plant cost the joint venture company more than $74 million.

But deregulation after the plant opened meant the price of electricity fell, making it less economic for Mercury to buy power from the station. In March 1998, Mercury wrote the value of, the plant down to $50.5 million.

Five months later it called in its debenture and on December 11, Mercury appointed a receiver. The station was later sold to Contact Energy for $50 million.

A Vector spokeswoman said the company was not prepared to comment on Mr McLachlan's court action at this time.

Last week Mr McLachlan's Geotherm Group was granted consents to build a separate $280 million geothermal station.

The station will be built 4km west of Taupo, generating power using 70,000 tonnes of geothermal fluid per day sourced from the Wairakei-Tauhara geothermal field, also used by Contact Energy.

- NZPA