UtiliCorp keen to reduce United stake

By RICHARD BRADDELL

WELLINGTON - UnitedNetworks' 79 per cent controlling shareholder, UtiliCorp, would like to reduce its ownership closer to 50 per cent before the end of the year, but is still considering options for doing so.

Last September, volatile market conditions forced United, New Zealand's largest electricity lines company, to scrap a $78 million institutional issue aimed at improving stock liquidity.

But chief executive Dan Warnock said yesterday that Kansas-based UtiliCorp was keen to dilute its holding because at 79 per cent it was effectively assuming responsibility for 100 per cent of United's debt.

The ownership reduction might be achieved by a public offering or institutional placement, with the target timetable being "clearly before the end of the year."

Mr Warnock said the Government's electricity inquiry offered a very balanced approach with its recommendations for an electricity ombudsman and a single governance body, given the history of finger-pointing in the industry.

"When I came in February, there were articles about who did what, who raised the price.

"It was the lines companies. No, it was the retailers. It was very confusing for the customers because they felt very vulnerable because they didn't have anybody to go to."

But he felt the inquiry's proposal for recalibrating ODVs (the asset valuations lines companies must make by law) could discourage investment that would lower prices.

One problem with recalibrated ODVs was that lines companies might not be able to account for the full cost of underground cabling unless it was mandated in their area by the local councils.

While lines companies wanted to avoid disasters like the Auckland power crisis, an inappropriate regime could deter such moves as the integration of United's four businesses, which saved $15 million a year.

"If we have a property we are not recovering on, certainly it's going to be hard to be doing business in New Zealand under these kinds of rules," Mr Warnock said.

United saw little likelihood of overseas expansion at present, but he said it was seeking new business opportunities.

Prospects included extending its contracting business - it installs water meters. It would look at water privatisations if they came along, and at telecommunications.