Powerco downgrades profits by half over share sale

By CHRIS DANIELS energy writer

Powerco has downgraded its profits by half, saying moves to sell more than half of its shares mean it can no longer rely on using accumulated tax losses.

The New Plymouth District Council, the Taranaki Energy Trust and the Powerco Wanganui Trust are selling their combined 53.6 per cent stake in Powerco.

"The potential change in shareholder continuity no longer makes the asset valuation of future income taxation benefits 'virtually certain' as required by accounting standards," Powerco said.

As a result, it had written down the asset by $27.6 million.

The writedown cuts the profit of $55.1 million announced in April 2004 down to $27.6 million.

The profit drop does not affect dividends due to shareholders.

The deadline for indicative bids for the 53.6 per cent stake was extended last week to Wednesday.

More than 20 expressions of interest have been sent to the sale organiser, PricewaterhouseCoopers.

The councils decided to put their stake in Powerco up for sale after discovering it was in merger talks with listed gas pipelines company NGC.

Two-thirds owned by Australian energy company AGL, NGC is also talking to Auckland powerlines company Vector.