Wellington-headquartered NGC told the NZSX this morning that Vector had advised it intended to provide NGC later today with a notice of intention to make a full offer for all NGC shares.
Trading in NGC shares was halted ahead of receipt of that offer, with the NZSX saying a trading halt would remain in place until details of the Vector bid were released to the market.
Last year, Vector initially bought Australian Gas Light’s 66.05% shareholding in NGC for NZ$2.91 per share, then earlier this year snared just 1.15% extra in its bid to NGC’s estimated 15,000 minority shareholders at the same price, primarily as NGC shares had then been trading around NZ$3.00.
Since then, NGC shares have dropped in price and last traded at NZ$2.50 on Friday, making a full takeover by Vector, which plans an IPO for just under 25% of the company later this year, a little more achievable.
Grant Samuel & Associates’ independent report last November said the underlying value of NGC shares was in the range of NZ$2.50-2.76.
Meanwhile, the Dominion Post newspaper today reports that Vector and Powerco - NZ's two biggest gas distributors and electricity reticulators - are seeking a judicial review of the Commerce Commission's recommendations last December that their prices should be controlled.
The government allowed two months for submissions after receiving the commission's recommendations last December and had been expected to this month decide whether to regulate Powerco and Vector.
Powerco lodged its application for a High Court judicial review on May 31 and Vector on June 16.
Vector today declined to comment to EnergyReview.net on the matter and Powerco chief executive Steve Boulton could not be contacted.
The newspaper said Energy Minister Trevor Mallard has asked from input from the Economic Development Ministry on the commission’s recommendation and that if he accepts their advice then Powerco and Vector could proceed with their requests for a judicial review.
The Wellington-based commission last year estimated a net benefit to buyers (gas retailers) of price controls on gas transmission and distribution networks to be nearly NZ$20 million a year. It said Vector and Powerco each had substantial market power and were earning excess returns above their cost of capital.
The commission also said imposing direct controls on Vector would achieve a net benefit of NZ$6.9 million per annum, while regulating Powerco's proces would yield a NZ$3.7 million benefit.
The net benefits equated to average distribution charge reductions of 18.5% and 12.2% for consumers on the Vector (over 73,000 customers) and Powerco (over 107,000) networks.
