Prime, the New Plymouth District Council, Taranaki Electricity Trust and Powerco Wanganui Trust announced in New Plymouth today that Prime had signed a conditional Lock-In Agreement and was now the preferred bidder for the acquisition of 53.65% of the issued share capital of Powerco.
Both Prime managing director Chris Chapman and New Plymouth Mayor Peter Tennent said they were delighted with the deal.
“This is a win-win situation for the council; we have obtained a premium on our shares and will have a large sum to invest in a diversified portfolio. Prime has given a commitment to maintain current management and staff at Powerco and to retain the New Plymouth head ofice,” said Tennent.
“Prime look for long term assets and have been very impressed with (Powerco chief executive) Steven Boulton and his team. It will be busines as usual for Powerco and we have no plans whatsoever to change management. Powerco will be a strategic asset for Prime Infrastructure,” Chapman said.
He added that Prime’s move to acquire Powerco would mean over 50% of the Brisbane’s company’s assets would now be in New Zealand, where previously it had no holdings.
Chapman also said the deal reflected Prime Infrastructure’s confidence in the local economy and growth prospects of New Zealand. That confidence was further supported by Prime’s planned listing on the NZSX, which would give New Zealanders the opportunity to participate.
He said Prime had not been put off purchasing Powerco by New Zealand’s increasing tight regulatory environment for energy network companies. “That’s already been factored in and we actually see a number of opportunities in the medium term.” However, he declined to tell EnergyReview.Net what those opportunities might be.
After completing due diligence, Prime Infrastructure would start preparation for a full takeover of this country’s largest gas reticulator and second biggest electricity lines company. The offer for all Powerco ordinary shares and unsecured subordinated capital bonds represented a total enterprise value of approximately NZ$1.815 billion.
Tennent said the NZ$2.15 share price represented “an attractive premium” to the council, considering its 38.16% shareholding, and all other shareholders. The offer represented a 27.2% premium when compared to the share price on last August 1.
Prime would seek appropriate Powerco board representation, as well as active participation in the running of the company, Chapman added.
Chapman said Prime and Powerco first started talking about 18 months ago when they were thinking of making a complete takeover bid for United Networks Ltd. (Powerco subsequently won part of UNL.)
Prime had recently bid unsuccessfully for Duke Energy but the momentum gained from that was used in securing the Powerco deal.
Prime’s assets include interests in the 99-year lease of the Dalrymple Bay Coal Terminal in Queensland; the Ecogen power assets (namely the Newport and Jeeralang Power Stations) in Victoria; and a stake in the coal–tailings fired Redbank Power Station in the Hunter Valley of NSW.
It is believed the Australian Gas Light and Australian Pipeline Trust companies were also interested in Powerco. Some commentators are now wondering if AGL’s failure to win stakes in either Powerco or Contact Energy (Origin won Edison Mission Energy’s 51.2% interest) signals the end of its involvement in the New Zealand energy sector.
