Infratil secures half of TrustPower

Utilities investor Infratil said today it had bought Alliant Energy's 24 percent stake in TrustPower to give it 50 percent control of the country's fifth-largest power company.

Infratil paid the US company $445 million in cash plus took over $65m of debt for Alliant's New Zealand's assets. These are the TrustPower stake plus a 5.1 per cent stake in Infratil.

Before the purchase, Infratil had 35.2 per cent of the Bay of Plenty-headquartered power company, while the Tauranga Energy Consumer Trust held 28.6 per cent.

Infratil said it proposed to retain a minimum of 15 per cent of TrustPower through the Alliant holding company it bought.

Infratil said it will sell down around 4 per cent of TrustPower to increase liquidity.

Infratil chairman David Newman said it and Alliant had worked together since 1999.

Infratil bought into TrustPower in 1994 and believed it will continue to be an exceptional performer.

"As a renewables generator it will also benefit from the global drivers associated with climate change, as these forces work their way into Government policies," he said.

The purchase will be debt financed.

Having over 50 per cent of TrustPower would allow Infratil to consolidate it into its balance sheet and get control of cashflows.

Infratil director Lloyd Morrison said Infratil's debt levels had to be viewed in the context of the very strong balance sheet of TrustPower and Infratil's other subsidiaries.

Infratil and the Tauranga trust had co-operated in the past and Mr Morrison said Infratil believed the trust had also benefited from this joint effort.

Infratil has agreed to give the trust an option for the Trust to buy up to 14 million TrustPower shares (4.4 per cent of the company) at $5.90 per share plus an option to purchase up to 10.95 million Infratil shares at market price.

Infratil shares were up 5 cents at $4.40 today.

The options are linked to changes in the TrustPower constitution.

These are: to confirm a Tauranga base for TrustPower; a right to appoint one director to a 25 per cent owner and a limit on TrustPower's debt gearing.

Should the trust not exercise these options, Infratil said it would place these shares in the market.

Infratil does not intend to permanently buy back the 5.07 per cent of its own shares.

TrustPower's shares were suspended before the announcement, unchanged from yesterday, on $7.00.

- NZPA