Powerco increases stake in Central

By Mark Reynolds

The creation of a lower North Island electricity transmission network with assets of more than $400 million has inched forward, with New Plymouth-based Powerco moving to increase its stake in neighbouring CentralPower.

Powerco has agreed to buy a 7 per cent stake in CentralPower from Alliant International of the United States. It has also made an offer to buy Infrastructure and Utilities' (Infratil) 16 per cent stake in the company.

The purchases, if they are completed, would give Powerco a 32 per cent stake in CentralPower. That stake would give it the leverage to push for a merger of the two organisations.

"We see these moves as the latest step on that journey toward a merger," said Powerco chairman Barry Upson. "Integrating the operations of two companies that do similar things in the same area would seem to make sense and we would like to see that progress."

CentralPower has in the past resisted such a merger, saying that the benefits have not been proved. Mr Upson said his company planned to have an independent adviser assess the benefits, so that the shareholders of both companies could assess whether it was in the best interests of all stakeholders.

The other main shareholders in CentralPower are Palmerston North-based local councils. They have pre-emptive rights to some of the shares Powerco is planning to buy and could still move to exercise those rights. However, the councils face big costs to develop local infrastructure projects this year and any offer is likely to be met by ratepayer resistance.

Alliant and Infratil are selling out of CentralPower so that they can concentrate their New Zealand electricity investments in Tauranga-based power retailer TrustPower. Their battle for control of TrustPower took a new twist yesterday with the Tauranga District Council agreeing to consider a deal to sell its holding in the company to Australian Gas Light (AGL). The council holds 14.9 million convertible notes in TrustPower through a local authority trading enterprise, Tauranga Civic Holdings. The council said it would consider a $62 million offer for the notes, $2 million more than a deal negotiated to sell the notes to Alliant. That deal is subject to court action after the Tauranga Electricity Consumer Trust - also a major shareholder in TrustPower - said it had pre-emptive rights to the 7.5 per cent stake. The TrustPower board favours a deal with AGL but Infratil and Alliant are working together to stop that happening.