It told the ASX and NZX yesterday afternoon that the offer, to acquire all Powerco’s shares and unsecured subordinated capital bonds, would open around October 4 and close about November 2.
In early August Prime signed a conditional agreement with the New Plymouth District Council, Taranaki Electricity Trust and Powerco Wanganui Trust to purchase 53.65% of Powerco for NZ$2.15 a share. Under the Takeovers Code it is obliged to extend that offer to all Powerco share and bond holders.
Prime is offering three payment options:
• 100% NZ SPARCS (Subordinated Prime Adjusting Rest Convertible Securities that are unsecured with no fixed redemption or conversion rates).
• A combination of 62.5% cash and 37.5% Sparcs, subject to scaling (the most popular option).
• Up to 100% cash, subject to scaling (around 25% of Powerco’s small shareholders are eligible for this option).
Prime also issued a prospectus and investment statement it hopes to list on the New Zealand Debt Exchange.
“We are delighted to now be able to present our offer to Powerco shareholders and capital bond holders . . . we are confident an informed marketplace will now come to understand the considerable merits of the offer,” Prime managing director Chris Chapman said.
SPARCS could be converted into Prime Infrastructure stapled securities or redeemed for cash under certain conditions. This was important to remember, as through this conversion mechanism, accepting Powerco shareholders could share in the future growth of the combined Powerco-Prime Infrastructure.
Chapman also moved to further dispel the disquiet expressed by some over the Prime-Powerco deal.
“We re-affirm our commitment to the Powerco management team and the continuation of head office operations in New Plymouth. We also understand that maintaining asset quality and performance is vital to the long-term success of our investment . . . we see opportunities to grow Powerco,” he added.
New Plymouth accountant Kevin Landrigan has expressed concern that Prime's “high” debt levels will lead to Powerco being “milked for cash", while New Zealand Herald business commentator Brian Gaynor has said the indicative 8.5% debt securities are “far too low for an extremely high risk security".
