Vector scotches partial float

By PAULA OLIVER

Vector has finally confirmed that it has abandoned plans to partly float on the stock exchange.

The country's largest lines company said this yesterday as it revealed a drop in net profit over the past 15 months to $49.7 million, down from $61.7 million for the previous 12-month period.

Vector's canning of the float proposal came as no surprise to those who had been following the issue closely - it had been flagged as far back as February.

Investors in Vector's $307 million bond issue will now see the yield on their bonds increase from 8.25 per cent to 9.75 per cent, because of an agreement Vector made if its float did not proceed by September 30.

Chairman Michael Stiassny yesterday said that the company still had long-term growth plans but it did not need to raise equity to achieve them.

Vector is owned by its customers through the elected Auckland Energy Consumer Trust.

The prospect of a 24.9 per cent float was first raised last September, when Vector raised $307 million through a bond issue, primarily to help pay for its $1.5 billion purchase of UnitedNetworks.

It then said it was "working towards" a partial privatisation and listing.

Bondholders were given the right to invest in any future float, but even at the first announcement of the idea Vector's board of directors seemed unclear on whether it wanted to proceed with it.

Yesterday's decision ended months of speculation and political sniping over the float's prospects.

It also dealt a blow to the New Zealand Exchange, which is eager for quality new listings and would have seen Vector as one of the biggest public offerings coming up.

The death of the float overshadowed Vector's result, which showed a fall in profit despite strong revenue flows after the purchase of UnitedNetworks.

The result was given as a 15-month figure because of Vector's change of balance date.

Operating revenue for the period was $527 million, up from $241 million for the previous year.

But the operating profit fell to $81 million from $96 million.

Earnings per share were down to 16.6c from 20.6c.

Stiassny said that the result was ahead of forecast and that solid progress had been made in bedding down the complex merger of UnitedNetworks' businesses.

There was still some way to go before the integration was complete, but the board believed that there were already clear indications that the merger was a success.

Chief executive Mark Franklin said that Vector's operating performance was particularly pleasing when it was remembered that electricity revenues were below budget in some months because of the electricity supply shortage earlier this winter.

"These were offset by a number of integration efficiencies that have been realised at an earlier than anticipated stage of the transition, as well as prudent cost management during a challenging period."

Vector's sole shareholder, the comsumer trust, must approve any plan to issue a dividend.