TrustPower fight pushes shares up 16pc

By RICHARD BRADDELL utilities writer

TrustPower's shares jumped 50c to $3.65 yesterday, as Infratil and its US partner, Alliant Energy, snapped up 1.4 per cent of the company on market, taking their combined stake to 45.4 per cent.

But the buying fell short of a bid for control and offered no resolution of the position of 20.5 per cent shareholder, Australian Gas Light, which is preoccupied with nursing its problem child, Natural Gas Corporation.

Lloyd Morrison of Infratil was emphatic that Alliant/Infratil's on-market purchases did not comprise a bid, but confirmed the duo were intent on increasing their stake ahead of the Takeovers Code coming into force on Sunday.

"I would say Lloyd is moving while AGL is weak," one analyst said, adding that Alliant/Infratil would take the opportunity to shift the balance of power on TrustPower's board while AGL could not retaliate.

Mr Morrison reiterated Infratil's previously stated objective of increasing its influence over TrustPower which, he said, was an excellent performer in its generation and retailing businesses, but could benefit from the risk-management skills gleaned from Infratil's involvement in Southern Hydro in Australia.

He said he would be amazed if Alliant/Infratil got more than 50 per cent, but would be delighted if they picked up a further 2 or 3 per cent in coming days.

Newly acquired shares are being split 60 per cent to Infratil and 40 per cent to Alliant, reflecting their existing stakes.

But while Infratil views TrustPower as a long-term strategic investment, it would sell at the right price.

TrustPower's shares are tightly held, with the Tauranga Energy Consumer Trust holding 22.7 per cent and around 15,000 small shareholders with parcels of around 1000. The trust yesterday issued a statement saying it had no intention of selling shares to Alliant or Infratil.

For small shareholders, the next few days may be a test of their resolve as they digest the clear message - delivered by TrustPower's recent profit downgrade and NGC losses - that the electricity market can be risky.

NGC has foreshadowed a June-year loss of up to $310 million. Little is known about the company's hedge position, other than it was disastrously underhedged.