NGC poised to make $35m payout

By PAUL PANCKHURST


Takeover target NGC, the North Island gas lines company, is expected to announce today a special dividend of up to $35 million.

Analysts were yesterday forecasting an 8c-a-share payment to use up imputation credits before control of the business shifts to Auckland power lines company Vector.

NGC chief executive Phil James said the board was to consider the issue last night and would make an announcement today.

He confirmed 8c - or $35 million in total - was in the possible range.

However, he would not say the payout was certain.

"I can't pre-empt the board's decision on that."

An analyst said: "It would be financially irresponsible for the board not to pay it out."

A special dividend ensures tax credits are not lost because of a change in company control.

On Monday, the publicly owned Vector announced a deal to pay $877 million for the 66 per cent of NGC owned by Australian Gas Light.

The deal triggers a full takeover offer at the same price of $3 a share - meaning a total bid of $1.3 billion.

Vector also announced plans to float up to 24.9 per cent of its shares on the stock exchange within a year to help pay for the takeover.

Sharemarket analysts are running through how the numbers might stack up for a float.

One report puts the enterprise value - that is, the combination of equity and debt - of a combined NGC/Vector at $5.32 billion.

A float of up to 24.9 per cent of the expanded Vector could raise $580 million, the report said.

NGC's share price closed yesterday up 1c at $3.01 after falling 6c on Monday.

One analyst's prediction on the likely reaction of shareholders other than AGL to the Vector offer: "It ain't going to clear out the minorities - but the hedge funds will leave."

Hedge funds are international investors and often exploit opportunities such as takeover plays.

Another analyst said the independent appraisal report on the offer and the recommendation from NGC's directors to shareholders would influence the offer uptake.

"This is one where the independent report and the directors' recommendation will genuinely mean something."