Infratil tightens grip on TrustPower after share buyback

By CHRIS DANIELS energy writer

Infratil, in alliance with US energy investor Alliant, has tightened its grip on Tauranga-based energy company TrustPower, with Australian Gas Light (AGL) selling its 20.5 per cent stake.

With the Australians now gone, selling out under a controversial share buyback scheme, Infratil now owns 35.3 per cent of TrustPower, up from 27.9 per cent, while Alliant goes to 23.8 per cent from 18.9 per cent.

The other big shareholder, the Tauranga Energy Consumer Trust, now owns 28.6 per cent of the company, up from 22.7 per cent.

The two-for-seven share buyback, launched with the ostensible purpose of restructuring Trustpower's balance sheet, has enabled AGL to exit the company and concentrate on its remaining New Zealand investment in NGC.

The buyback attracted the scrutiny of the Takeovers Panel, which said it breached the Takeovers Code because shareholders were asked to commit to selling their shares without knowing what the structure of the company would be after the big shareholders made their decision.

Members of the public who have accepted the buyback offer have now been given seven days after a shareholders' meeting to decide if they still want to sell.

While the offer was for only $3.70 a share, and TrustPower shares are trading on the Stock Exchange for more than $4.20, the ease of selling to the company has swayed many small shareholders to accept the offer.

Shareholders who have rejected the offer cannot now take part.

An independent adviser's report and a shareholders meeting are expected in early June.

The chairman of the Tauranga Energy Consumer Trust, Michael Cooney, said that while the electricity sector was complex the trust had no plans to challenge any aspect of the buyback.

"The trust is quite comfortable with the position it now finds itself in," he said.

ABN Amro analyst James Miller said the exit of AGL was expected and removed some of the uncertainty around its role in TrustPower.

Smaller investors in TrustPower had just seen their investments rise in value because of the buyback.

Infratil was now firmly in control of TrustPower.

AGL managing director Greg Martin said it would be paid $150 million for its 40.6 million Trustpower shares.

He said AGL's shareholding in TrustPower had been under review during the past year.

Taking up the share buyback offer had provided an opportunity to sell its shareholding and was consistent with the AGL strategy of refocusing efforts in New Zealand around its "core business portfolio" - namely its 66 per cent stake in NGC.

AGL is using the proceeds from the share sale to reduce debt. Infratil and Alliant have an investment agreement and pre-emptive rights over eachother's shareholding. Infratil's share price closed down one cent yesterday, at $1.79.

AGL began building its TrustPower stake in January 1999 after buying 14.2 million shares through a placement, paying $2.80 a share for a 7.9 per cent holding.

The purchase triggered a tussle for control of the energy company involving incumbent major shareholders Infratil and Alliant on one side and TrustPower wooing AGL as preferred partner on the other.