NGC on course for deal at 279c

By FIONA ROTHERHAM

The Natural Gas Corporation expects its takeover offer to TransAlta's minority shareholders will be finalised at 279c a share, despite a Stock Exchange notice indicating a 19c price range.

In the notice of proposed restricted transfer issued to the exchange last week, NGC said the consideration under the $166 million takeover offer, if made, would be within the range of 260c to 279c for each TransAlta ordinary share.

NGC already holds 75.8 per cent of TranAlta and has reached a conditional deal with the Hutt Mana Energy Trust, which holds a 14.6 per cent stake.

Trust chairman Jeff Berkett said consultation with trust beneficiaries would be based on an offer of 279c.

"No ifs, no buts," he said. "We bargained for a long while to get there."

NGC spokesman Keith Fitzpatrick said a spread was required in the transfer notice.

"It is customary to have a bit of flexibility in there. Our expectation, and the basis of the trust consultation, is at 279c a share."

The trust plans to do a share swap rather than a cash deal, with the corporation's shares valued at 150c.

Trustee Molly Melhuish has criticised the deal, saying it is so bad it would be better for the trust to be wound up.

The deal will result in TransAlta and NGC merging to form New Zealand's largest energy company, in which the trust will have a 9.7 per cent stake.

Mrs Melhuish said the 29c premium over the price previously offered by TransAlta Canada was not worth that much when TransAlta's recent power price rises were considered.

"The trust says it can have the same advocacy role but the pricing increases have proved us a fool."

There is market speculation that the merged company will rename itself Energy Direct. NGC had rights to the TransAlta name for one year.

The trust's beneficiaries will be consulted before a final decision is made late next month.

Broking house ABN Amro, which values TransAlta's shares at 247c each, said the trust had struck a very good deal.

The broker has advised its clients to buy NGC shares as it values them at 213c a share, well above the price named for the share swap.

Analyst James Miller said NGC was in a much better cash-flow position since it moved into a take-or-pay surplus on its Maui gas contract.