KEY POINTS:
Australian investment firm Babcock & Brown Infrastructure has sold 50 per cent of the New Zealand operations of North Island electricity and gas distribution business Powerco.
The operations are being bought by funds managed by Australian investment manager QIC.
BBI today said the sale ascribed to an enterprise value of $2.05 billion for Powerco's New Zealand business.
BBI would retain all of Powerco's Tasmanian gas distribution business, which had a book enterprise value of $200 million.
The signing of a sale and purchase agreement had followed a competitive sales process.
The deal was a 25 per cent premium over the original 2004 acquisition price of $1.8b for Powerco, BBI said.
Net proceeds from the sale were expected to be about $400m, with the deal expected to close in the first quarter of 2009.
Capital raised would be applied to reduce corporate debt as well as fund organic growth opportunities across BBI's international portfolio of infrastructure assets.
BBI said the sale demonstrated the underlying value of its portfolio and the valuation gap between asset valuations and the current BBI security price.
After the financial close of the deal, BBI and the funds managed by QIC would share control of the asset.
QIC head of global infrastructure Ross Israel said Powerco was a strategic core regulated utility.
"As a mature business, we expect it to provide stable long-term returns. We look forward to working with BBI to continue to provide strong service levels for Powerco customers and further grow the business."
The sale was conditional on gaining required consents, including from the Overseas Investment Office, lender consents and other consents relating to the transfer of Powerco Tasmania.
Powerco was New Zealand's second largest electricity and gas distribution business with more than 400,000 connected customers across service areas covering more than 39,000sq km in the North Island.
- NZPA
