Trust may seek key stake in TrustPower

The Tauranga Energy Consumer Trust may yet enter the auction for the cornerstone stake in electricity generator TrustPower.

Trust chairman Michael Cooney said he would ask the trust to consider a plan to buy a greater share in the generator at the trust's meeting next week. The trust already holds a 28.6 per cent stake in TrustPower and would likely have to make a bid for the remaining shares if it follows through with the plan.

"I would not rule us out," Cooney said. "Personally I would be interested in getting a bigger stake into Tauranga hands."

United States energy giant Alliant on Wednesday disclosed plans to sell its cornerstone stake in TrustPower, New Zealand's fifth-largest power retailer, selling electricity from dams and wind farms to about one in every five households.

It has set two of New Zealand's largest investment banks against each other to get the best price. First New Zealand Capital was asked to find a buyer for Alliant's New Zealand holding company - which has a 23.8 per cent stake in TrustPower and just over 5.07 per cent of infrastructure investor Infratil - and is worth almost $560 million.

Meanwhile, ABN Amro has been asked to canvass professional investor interest in the assets, with an eye to breaking the holding company apart and selling its investments piecemeal.

Cooney said the trust's strong balance sheet gave it the firepower to increase its stake. Its accounts for the year to March show the trust has no long-term debt and shareholder equity of more than $638 million. The trust also has investments in property and managed funds.

Alliant's long-rumoured sale follows its disposal this year of investments in China and Brazil. It also plans to sell two power plants in China and a partially completed tourist resort in Mexico.

In 1999 Alliant bought into TrustPower. The holding company has a book value of $166 million, suggesting Alliant could book a gain of close to $400 million.

Other buyers for the assets include rival generators such as Contact and Meridian, renewable energy investors, and infrastructure investment funds.

Infratil, owner of airports, New Zealand's biggest bus company and energy businesses in Australia, is also a potential buyer of the TrustPower stake.

But it will not buy the holding company because it would also be buying its own shares.