Council to reveal Powerco stake fate

By CHRIS DANIELS AND PAUL PANCKHURST

It's all eyes on New Plymouth today as the sharemarket waits to discover the fate of a 53.6 per cent stake in listed lines company Powerco.

The New Plymouth District Council - one of three regional bodies trying to sell out of the company - has scheduled a media briefing for 10am.

Council spokesman Nick Maybury said last night the briefing was "concerning the sales process for the Powerco shareholding - I can't tell you anything more than that.

"All will be revealed."

Bids closed on Friday for the stake held by the council, Taranaki Electricity Trust and Powerco Wanganui Trust.

If the stake has sold, the buyer will be required to make a takeover offer to the rest of the company's shareholders.

The Business Herald was told that bidders from Australia had included ANZ Private Equity and an infrastructure fund of investment bank Babcock & Brown.

The last share price for Powerco was $2.15.

The New Plymouth council has consistently talked of wanting a premium for its stake but finance industry insiders are sceptical that it will get more than the market price.

New Plymouth Mayor Peter Tennent has said the council is confident of "a good premium on our shareholding".

"I would be really surprised if they got anything like market," said one sharemarket player last night.

The reasons for doubt include the "regulatory risk" - the possible effects of Government rules for the sector on profitability.

However, one analyst was last night picking a price of $1.95 to $2.20 - if the stake sold.

The analyst said Powerco could be "a beachhead" if an overseas company wanted to make a play for another listed New Zealand power company, the Australian-controlled NGC.

Speculation is increasing that AGL - NGC's majority shareholder and also a failed bidder for control of Contact Energy - may pack its bags and leave New Zealand.

The council's Powerco stake went on the block after the Business Herald reported in April that Powerco was in merger talks with NGC.

That prompted NGC to disclose it was in talks with both Powerco and Vector on "potential opportunities".

POWERCO

Headquarters: New Plymouth

Business: distributes gas and electricity in parts of Australia and New Zealand

Market capitalisation: $680 million

Share price: $2.15