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Vector, New Zealand's biggest electricity and gas distributor, plans to buy back as many as 25 million of the company's shares to increase investor returns.
Vector's shares are undervalued and represent an attractive "risk-return proposition," chairman Mike Stiassny said in a statement to the NZ stock exchange yesterday.
Terms of the buyback, equivalent to 2.5 per cent of the company's shares, will be provided after full-year results on August 27, he said.
Auckland-based Vector has funds to spare after the $785 million sale of its Wellington power network to Cheung Kong Infrastructure Holdings last month. The sale reduced the company's debt to 50 per cent of total assets and prompted Moody's Investors Service to raise Vector's rating outlook to "stable" from "developing".
Vector gained 7 cents to $2.25 yesterday. The stock has advanced 13 per cent since shareholders approved the Wellington asset sale on May 30.
At yesterday's price, the proposed buyback will cost the company about $56 million.
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