US energy giant to sell its NZ stake

United States energy giant Alliant is to sell its cornerstone stake in generator TrustPower and has set two of New Zealand's largest investment banks against each other to get the best price.

Alliant wants to focus on its utilities in the US mid-west. It has asked First New Zealand Capital to find a buyer for the 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 just under $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.

Alliant said: "An international presence is no longer consistent with our long-term business strategy.

"We have native generation requirements for our US customers that we are looking to make investments in."

In 1999 Alliant bought into TrustPower, New Zealand's fifth-largest power retailer, selling electricity from dams and wind farms to about one in every five households.

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

The long-rumoured sale follows Alliant's 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.

Amid hopes of keen interest in the assets, TrustPower shares rose 8c, or 1.3 per cent, to $6.85. Shares in Infratil, which owns 35 per cent of Trustpower, fell 5c to $4.15.

By engaging the two investment banks pursuing alternative strategies, Alliant has effectively asked potential buyers to sort out a number of complications to the disposal. These include:

* The holding company's stake in Infratil.

* Infratil's right of first refusal over the shares - which may be avoided if Alliant NZ is sold whole.

* Tax liabilities that may be crystallised if the holding company is dissolved and the assets sold piecemeal.

* TrustPower's tight shareholder register. Potential bidders for the generator will first have to win over Infratil and the Tauranga Energy Consumer Trust. Their combined stake of nearly 64 per cent is enough to block any buyer from taking control.

* Takeovers Code provisions requiring any buyer of the TrustPower stake to make a full takeover for the company or obtain shareholder approval to take Alliant's minority stake.

* Alliant New Zealand's outstanding $240 million of redeemable preference shares.

Despite these difficulties, analysts said buyers 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.

Infratil executive director Bruce Harker said: "We are pretty comfortable with our stake and the stability contributed [to the company] by the trust and ourselves. We are looking at our options and are still talking regularly with Alliant."

The Tauranga Energy Consumer Trust was not available for comment.


Alliant New Zealand

* Owned by Wisconsin-based Alliant Energy.
* Value $560 million (est).
* Began investing in New Zealand in 1995.
* Holds 23.8 per cent of Trustpower and 5.07 per cent of Infratil.
* Also developing other electricity generation projects.

- Additional reporting Agencies