Powerco rebuff for council

By CHRIS DANIELS


The New Plymouth District Council will get no special treatment in the increasingly contentious sale of its shares in power lines company Powerco.

Takeovers Panel chairman John King said yesterday that despite the council's claim to have a binding deal with Australian company Prime Infrastructure, it would be treated the same as any other Powerco shareholder.

Powerco shares were again sold at record levels yesterday - 41.5 million shares worth $87.7 million and equating to more than 13 per cent of the company changed hands.

The price fell 2c to $2.10 a share, 5c below Prime's takeover offer of $2.15.

Since the Takeovers Panel ruled on September 9 that foreign shareholders could be paid in cash, about 43 per cent of the company has been traded.

The council and two community trusts say they have a deal where they are paid for their 53.6 per cent Powerco stake at a fixed ratio of 62.5 per cent cash and 37.5 per cent in bonds. They say any scaling back of the cash component will not affect them.

When the Takeovers Panel gave its cash-only waiver, only 0.3 per cent of Powerco shareholders were overseas.

But the ruling led to a flood of shares leaving New Zealand, bought by speculators taking advantage of the small difference between the market price and Prime's takeover price.

King said the issue was black and white when it came to New Zealand shareholders. No group could get preference, regardless of any prior contract.

"The law is the law is the law - and rule 20 of our code says all shareholders will be treated the same, so if there is scaling, then the scaling that applies will apply across the board and the council will be treated the same as everyone else," he said.

"You can't sign a contract which is in conflict with the law."

Powerco chief executive Steven Boulton said it was "business as usual" for the company, which was now preparing advice from its directors and an independent assessment of the Prime offer.

This would be sent to shareholders by October 18.

The problem now facing the council is that each share that goes overseas reduces the amount of cash left for New Zealand shareholders in Prime's takeover pool.

This means the council and trusts are more likely to get paid in the unrated, unsecured bonds.

If 30 per cent of Powerco is held overseas, it would reduce the council and trusts' cash payment to 46.7 per cent, rather than the 62.5 per cent cash the council says Prime has promised.

Instead of getting $227.9 million in cash, it would get $170.3 million in cash and the rest in bonds.