UtiliCorp sees gas as big opportunity

By RICHARD BRADDELL

WELLINGTON - UnitedNetworks' parent, Kansas-based UtiliCorp United, will be a keen starter when bidding opens for the North Island gas networks put up for sale by Christchurch network company Orion.

The chairman of the international utility giant, Rick Green, agreed yesterday that the network that once was the heart of Enerco would sell at a juicy premium to the $270 million book valuation.

Just how much was a matter of conjecture as the information memorandum would not become available until Christmas.

But Mr Green said there were considerable benefits in combining Orion's gas activities with United's electricity network as there was a 50 per cent service area overlap in Auckland and Wellington.

While UtiliCorp and its 79 per cent-owned subsidiary UnitedNetworks were best known in New Zealand as electricity companies, Mr Green said, globally UtiliCorp had more gas than electricity customers.

Aside from Orion's gas network, UtiliCorp was keen to expand its New Zealand network interests.

Nevertheless, he said, UtiliCorp was happy to dilute its stake in United by another attempt at a placement of stock with institutions, similar to the $78 million issue that was aborted in September during soggy sharemarket conditions.

While that issue was aimed at improving United's sharemarket liquidity, Mr Green said, UtiliCorp was not inherently against reducing its own stake through a selldown, as all it sought from investments was a leadership position to which it could bring its management skills.

In Victoria, it has management control of United Energy, even after a public issue reduced its stake to 34 per cent.

Mr Green had high praise for the New Zealand regulatory environment, which he said was the most advanced in the world.