Vector 'needs to sort itself out'

By LIAM DANN

Auckland powerlines company Vector must sort out its management structures before it goes ahead with its long-mooted sharemarket float, says a leading advocate of corporate governance.

Simon Botherway, a principal at fund manager Brook Asset Management, said the sharemarket had been turned off Vector by the recent and bitter political infighting at the company's owner, the Auckland Energy Consumer Trust.

Botherway said the trust, which has a major influence over the company and is likely to retain a controlling stake in Vector after the float, appeared to be run like a dysfunctional local body. His view was backed by other market players.

AMP equities analyst Douglas Lau said Vector had plenty of investor appeal, depending on how it was priced. But governance issues would be considered one of the risk factors weighing against it as analysts judged what it was worth.

A High Court judge has effectively cleared the way for Vector's partial flotation by forcing anti-privatisation trustees to front up to a meeting to vote on the matter.

In a ruling made last Friday - but released publicly only yesterday - Justice Helen Winkelmann said Vector could not function if the trustees "continued to play games".

She ordered them to vote on the issue at a meeting last Saturday.

Based on the trustee's political positions, it is almost certain that that vote was split 2-2 with chairman Warren Kyd casting a deciding ballot in favour of the proposal.

An earlier High Court decision barred a fifth trustee, John Collinge, from voting on the grounds that his family's ownership of $200,000 of Vector bonds was a "material interest" in the transaction.

At issue is an ideological battle over a proposal to float 25 per cent of the company and raise up to $700 million, to mount a takeover bid for gas pipeline group NGC.

NGC's Australian owner AGL has begun a tender process for its 66 per cent stake in the company.

It is understood that at least 20 companies have already expressed some interest in the sale. It is also understood that an October 6 deadline has been set for indicative bids.

Neither the trustees nor Vector management would comment yesterday about plans to list or to bid for NGC.

Kyd applauded the court's decision, saying "it had ensured that improper actions to subvert the processes of the trust were defeated".

He would not comment on Vector's next commercial move, saying that was a matter for the company.

Vector chairman Michael Stiassny also declined to comment.

A Vector spokesperson said the company would make no comment on matters relating to NGC or the possibility of listing.

Other trustees were either unavailable or declined to comment.

Botherway said it made sense for Vector to be looking at NGC.

But there were numerous potential buyers from all over the world so Vector was not crucial to the process.


Vexed times at powerlines company Vector


Last week

* Trust member John Collinge challenges a voting ban in the High Court but Justice Barry Paterson leaves it in place because Collinge owns Vector bonds.

* Kyd and Sherry meet and vote to approve a 25 per cent Vector share float, despite lacking a quorum. Collinge, Buzckowski and Chambers hold rebel meeting and vote out the plan.

* Kyd and trust go to the High Court, saying Collinge is in contempt of court and rebels in breach of duties.

Yesterday

* The High Court ruling is released that ordered rebels to attend a meeting last Saturday and vote.