Crunch time for share float as Vector and trust meet

It is crunch time for the biggest sharemarket float planned for this year - the $550 million to $650 million initial public offering by energy giant Vector.

The company's owner, the Auckland Energy Consumers Trust, is due to meet Vector today.

The Business Herald was told the company was "looking for a green light to get cracking with the IPO".

One investment banker said: "My pick is that the IPO will get the green light - but I would be staggered if it was unanimous."

The publicly elected trust has been looking at alternatives to a share float, despite the company's explicit advice that a float is the only commercially sensible option.

One proposal, from Australia's DUET - a listed company managed by Macquarie Bank and AMP Capital - is for the trust to retain 100 per cent ownership of the Auckland electricity network but reduce its ownership of other assets.

Vector's management and board are committed to selling 24.9 per cent of the company in a float after spending $880 million last year on a 66 per cent stake in gas transmission and distribution company NGC.

Only two of the trust's five members - chairman Warren Kyd and Karen Sherry - supported Vector's plans to buy the NGC stake and then float.

One trustee, John Collinge, was blocked from voting because of a conflict of interest and Kyd's casting vote approved the company's plans.

Vector has said that $354 million of PIPES - "pre-IPO equity securities" - from investment bank ABN Amro that helped fund the NGC share purchase must be repaid "from the proceeds of an IPO".

If the money is not repaid by a December or January deadline, the securities convert into ordinary shares and ABN Amro - Vector's financial adviser - will own a chunk of the company, which it would presumably onsell.

The Business Herald was told ABN Amro would get the shares at a significant discount to a market value calculated by looking at similar listed companies.

Vector also faces millions of dollars in penalties via two "step-up" fees to ABN Amro if the PIPES are not repaid quickly enough.

The trust's regular monthly meeting is today and financial market sources say the trust may decide whether to appoint an investment adviser to look at float alternatives.

Kyd and trust executive officer Gary Sturgess refused to comment.

Power play

* Owned by trust representing 290,000 power users.
* Delivers electricity and gas in the Auckland and Wellington regions.
* Has assets of $4.76 billion and debt of $3.1 billion.