Dilemma for Vector's owners

By CHRIS DANIELS

Owners of Vector, the largest powerlines company in New Zealand, are again faced with the privatisation question - bring in private money to expand or stay in trust ownership.

Australian power company AGL is selling its 66 per cent stake in NGC, with Vector an obvious buyer.

But Vector is 100 per cent owned by the community's Auckland Energy Consumer Trust, which last week announced its annual dividend payout - $170 to the 286,000 homes and businesses in its area.

Any Vector bid for NGC would mean a float and partial privatisation, so any future (but possibly larger) dividend would have to be shared with the new owners.

Trust chairman Warren Kyd said the increase of more than 9 per cent on last year's dividend payment "reflects the success of Vector's merger with United Networks and its transformation into a high performing multi-network infrastructure company".

The dividend will appear on beneficiaries' power accounts this month and next month, depending on their place in the company's billing cycle.

Any Vector bid would have to be for 100 per cent of NGC, to comply with the Takeover Code and because full ownership would be needed if NGC's pipeline assets were to be fully integrated into the Vector business.

This year Vector commissioned a poll to ascertain how popular any privatisation of the company would be.

Shale Chambers, the one trustee elected on a no-privatisation platform, said any bid by Vector for NGC would "necessarily involve private equity".

"Vector could not fund the purchase of AGL shares without that being in the mix - it hasn't got the balance sheet," he said.

Chambers said no formal proposal of a float to pay for a tilt at NGC had yet been presented to the trust.

Different trustees had different opinions of what their roles were.

"The trust is still working through these issues, it's not easy," Chambers said.

"I can't pretend it is but I do think we get too hung up on personalities, which is a healthy dilemma between our roles as elected advocates on behalf of beneficiaries versus the prudent people of business trying to grow the business and increase the dividend.

"My position remains clear - I am not in favour of funding growth through an IPO, but I'm happy to look at all the opportunities and I'd be failing my duties as a trustee not to do so.

"But, at the end of the day, my position remains that it is an owner's prerogative whether they are in the market to sell their equity or not."