Strong demand lifts Powerco shares 11c

By CHRIS DANIELS

Powerco shares have jumped more than 5 per cent on news that most of its potential buyers are willing to offer a premium for a stake in the company.

As New Zealand's second-biggest lines company and the only one listed on the stock exchange, interest in Powerco has been high, according to agents for the Taranaki District Council and two local trusts, which together own 53.6 per cent.

Shares in the company finished up 11c yesterday at $2.07.

The council and trusts decided to sell out after hearing that Powerco was in merger talks with listed gas pipeline company NGC. Any buyer of the stake will have to offer the same price and terms to all Powerco shareholders.

PricewaterhouseCoopers, which is running the sales process, said yesterday that there was "ongoing keen interest in the opportunity to acquire the stake of the major shareholders".

The bids, which are from both local and overseas parties, will be considered by the council's equity subcommittee on June 30 and by the full council on July 1.

A final decision on the sale is likely within eight weeks of that meeting.

"The majority of bids have been priced at a premium to the current market price," the council said in a press statement.

New Plymouth Mayor Peter Tennent said PricewaterhouseCoopers had told the council they were "comfortable" with the bids received. He said the crucial number for the council when making its decision was $19.3 million - the amount it got each year from Powerco by way of dividends. If money raised by the sale could not replace this lost dividend, then it would not proceed.

Sale of the Powerco shares is just one of many big plays under way in the energy sector.

At the heart of an interconnected series of potential transactions is the sale of 51 per cent of energy generator and retailer Contact.

A potential buyer is Australian energy company AGL, which may have to sell its 66 per cent share of NGC to pay for it. Vector, the Auckland powerlines company, is also talking to NGC, but will not say what is on the negotiating table.

It announced yesterday that it is investigating raising new debt in the US private placement market. Expansion plans for Vector may be put on hold by the ongoing ructions in the trust that owns it, the Auckland Energy Consumer Trust.