Vector: $1.3b NGC bid tipped

By PAUL PANCKHURST


Publicly owned Auckland powerlines company Vector is today expected to reveal a plan to bid as much as $1.33 billion for gas pipelines group NGC.

Vector is thought to have tied up a deal over the weekend to buy a 66 per cent cornerstone shareholding from Australia's AGL. Speculation is that it has agreed to pay $2.90 to $3.00 a share. This is less than Friday's close of $3.06. Under stock exchange rules it will have to make the same offer to all other shareholders.

The deal with AGL may see Vector floated on the share market.

Last month it emerged in the High Court that Vector was considering buying a company, thought to be NGC, and offering a portion of its shares to the public. Observers have speculated the share issue was to raise cash for the acquisition.

The revelation came when the court upheld a decision to block trustee John Collinge from voting on the plan, because he had a "material interest" in the transaction.

Collinge, his family trust and his wife own or control $200,000 of Vector bonds which would have preferential entitlements in a share float.

The High Court decision split the Auckland Energy Consumer Trust down the middle, giving pro-privatisation trust chairman Warren Kyd the casting vote.

The High Court later ordered the trust to meet and vote on privatisation. Although the outcome was never disclosed, sources close to Herald say the plan was approved. The deal with AGL would come less than a week after the Australian firm stopped accepting offers for its stake.

Although as many as 20 different groups expressed an interest, people familiar with the negotiations said Vector's bid was the cleanest, containing the fewest conditions. Other bidders were contemplating a more-difficult break up.

Sources also said Vector has made an all cash bid, suggesting AGL preferred the certainty of Vector's deal.

Other bidders are thought to have included state-owned Genesis Power and Australian infrastructure investor Duet.

AGL decided to focus on Australia after it failed to win the auction for electricity generator and retailer Contact earlier this year.

AGL managing director Greg Martin said in August that his company wanted to use the proceeds of the sale of the NGC stake to buy or build power plants in Australia, expand in electricity retailing in New South Wales and invest in renewable energy generation.

"There are a range of areas where we see we can reapply those proceeds for greater returns to AGL shareholders," he said.

The ownership shake-up is part of a torrent of change in the energy sector. Prime Infrastructure, of Australia, is in the midst of a vexed takeover bid for Powerco.