Vector shuns chance to buy Powerco

By CHRIS DANIELS, energy writer

Vector, New Zealand's biggest powerlines company, says it is not in the hunt to buy Powerco.

Potential buyers for the Taranaki-based lines company are now more likely to come from overseas, with Australian, Asian and North American energy investors all interested.

They will now be able to bid for 53.6 per cent of New Zealand's second biggest monopoly lines company after Powerco Wanganui Trust, owner of 3.7 per cent of the company, joined the Taranaki District Council and the Taranaki Energy Trust in the sale process.

These two, with a combined ownership of 49.95 per cent of Powerco, decided to sell in April, after hearing that the lines company was in merger talks with NGC.

Many analysts are sceptical that these owners will be able to achieve their goal of a 25 per cent premium on their shares.

Any buyer of the 53.6 per cent stake must also launch a full takeover offer for Powerco, which has a market capitalisation of $660.8 million. The new offer of 53.6 per cent is likely to be more attractive, since control would be guaranteed even before any takeover offer was launched.

A Vector spokeswoman said the company was "not interested in the particular deal" being offered by PricewaterhouseCoopers.

Powerco shares yesterday closed at $2.08 each, up 3c. The remaining 46.4 per cent of the company is spread among 19,000 shareholders.

PricewaterhouseCoopers, which is running the sales process on behalf of the council and trust, says it has received at least 20 expressions of interest.

Indicative, non-binding bids for the Powerco shares were due by this Friday, but the deadline has been extended June 18. At least one expression of interest is expected from a New Zealand buyer.

Merger talks between Powerco and NGC are thought to be on hold now due to the sales process but NGC, which owns gas pipelines and a power metering business, has also talked with Vector.

Vector is fully owned by an elected community trust. Most of its members are thought to be supportive of an eventual stock exchange listing.

A back-door listing gained through a merger with NGC could provide a politically easier option for the trust than an unpopular partial privatisation through an IPO or float.

NGC is 66 per cent owned by Australian energy company AGL which has been tipped as one of the potential bidders for 51 per cent of Contact Energy which is being sold by energy giant Edison Mission.