Infratil forces NGC buyout by invoking act provisions

By FIONA ROTHERHAM

Infratil has invoked a rarely used Companies Act minority shareholder provision to force Natural Gas Corporation to buy its 6.7 per cent shareholding in NGC.

The right to have the 26.6 million shares bought by NGC comes under Sections 110 to 115 of the act, where a minority shareholder has the option of exiting at a "fair and reasonable" price.

In order to enforce the sections, Infratil had to record a negative vote to a major transaction.

It did so at last week's NGC shareholders' meeting, where majority approval was given to NGC's $824 million acquisition of electricity and gas retailer TransAlta. This deal, to be settled today, makes it the country's dominant energy retailer.

NGC chief executive Richard Bentley said Infratil was "perfectly entitled" to take the action. "This is not a surprise to us."

NGC was obliged under stock exchange rules to display the minority shareholder provisions in the notice of meeting sent to shareholders.

If Infratil does not accept the price put forward by NGC, it will go to an independent arbitrator for final determination. Infratil expects the buyout price will be higher than the current NGC market price, which closed yesterday down 1c at $1.32.

Infratil's directors said NGC's new direction no longer fitted with its energy investment strategy and there was an uncertain value impact associated with the TransAlta buy.

Infratil's main energy asset is its 26 per cent shareholding worth around $175 million in Tauranga-based TrustPower, which competes with TransAlta in the electricity market.

When Infratil announced last July that it had built up a stake in NGC, analysts said it was a spoiling or bargaining move.

At the time, Infratil was embroiled in a battle with NGC's 71 per cent owner, Australian Gas Light, for control of TrustPower.