Powerco chairman Barry Upson today released the Grant Samuel report into Brisbane-based Prime’s takeover of Powerco, this country’s largest gas reticulator and second largest electricity distributor.

“In general”, the offer price of NZ$2.15 per share is attractive, though the offer favours overseas shareholders and capital bondholders (except those in the United Kingdom) who can receive a cash-only payment, says the report.

New Zealand and United Kingdom shareholders, even if they select the cash option are likely to have their cash component scaled down with the balance of the consideration made up with Prime’s “Sparcs” securities. Hence, they are disadvantaged in that the value of any consideration that includes Sparcs as part payment may be worth less than $2.15 cash.

Some media commentators have described the unsecured, subordinated and non-rated securities as junk bonds.

“Grant Samuel has determined that the Sparcs may be worth less than par value,” said Upson. Accordingly, all the Powerco directors and senior officers who hold shares or capital bonds “have transferred, or intend to transfer, the address of the shares on the Powerco share register to an address outside New Zealand and the United Kingdom”. They then intend to accept the offer and receive payment in cash.

Upson said that the directors of Powerco (all of whom are independent) unanimously recommended other shareholders and capital bondholders take the following actions:

· If under 1100 shares, accept the cash-only offer.

· If over 1100 shares, change address to an address outside of NZ or UK; notify the registrar of such changes and accept the cash-only offer.

· NZ or UK bondholders, reject offer but change address to an address outside of NZ or UK) and notify registrar.

· Other overseas bondholders, reject offer.

Upson added that if Prime successfully acquired full control of Powerco it would spell the end of an era for Powerco, which would delist, its shareholders, and directors.

“We confident the company will continue to provide quality service to its approximately 300,000 electricity customers and 100,000 gas customers, and will continue to explore growth opportunities building on its historic management expertise in New Zealand and Australia,” Upson concluded.