NGC offers 279c to minority TransAlta holders

By FIONA ROTHERHAM

Natural Gas Corporation has made a formal takeover offer to all minority shareholders of TransAlta NZ at 279c a share, the same price it paid the former majority shareholder, TransAlta Energy Corporation of Canada, this year.

The takeover would pave the way for a merger to form New Zealand's largest energy retailer with a market capitalisation of $1.2 billion and more than 650,000 electricity and gas customers.

Analysts criticised the price that NGC's major shareholder, Australian Gas Light, paid for TransAlta Canada's 75.8 per cent interest as being too high without the added savings of a merger.

After months of negotiation, NGC chairman Len Bleasel said NGC had entered a conditional undertaking with the Hutt Mana Energy Trust, which holds a 14.6 per cent stake in TransAlta, and would file a 15-day restricted transfer notice with the Stock Exchange.

The takeover is conditional on the trust's acceptance, expected by late next month, and Overseas Investment Commission approval.

The offer is payable in either cash or NGC shares, which have been valued at 150c - some 20c per share above the offer made to Infratil in May after it invoked a rarely used Companies Act requirement to force the buyback of its 26.58 million shares. This issue is to go before an arbitrator for final determination.

The Hutt Mana Energy Trust said it wanted to stay in the energy business and would take a share swap rather than cash.

NGC's share price has risen from a low of 121c in April to close at 155c yesterday. The lower the share price, the higher stake the trust would have gained under the share swap. At 150c per share it is expected to end up with a 9.7 per cent holding in the merged company.

The trust said the NGC offer was 29c per share more than the 250c offered by TransAlta Canada when it tried to buy the trust shareholding in TransAlta NZ late last year for cash only.

Trust chairman Jeff Berkett said NGC had initially offered cash only but the trust was adamant that any deal would involve a share swap. Added benefits negotiated by the trust include a seat on the NGC board for its existing TransAlta director Richard Bettle and NGC's acquiring the trust's 15.4 million TransAlta capital notes - 14 per cent of the notes on issue - for $1 per note plus accrued interest.