Meridian offers fixed-rate notes

Monday 2nd February 2009

Meridian Energy is offering to sell fixed-rate notes as New Zealand's biggest power company ramps up construction of new wind and hydroelectric plants.

The Renewable Energy Notes are unsecured and unsubordinated debt securities maturing in 18 months or less, the state-owned company said in a statement. The securities are in three tranches - with the nine-month notes paying 5% annually, while the 12 and 18-month notes pay 5.25%.

By contrast, ANZ Bank is offering 3.5% interest for an 18-month term deposit, with a minimum NZ$5,000 investment. Interest rates offered on deposits have fallen as the central bank embarked on its steepest easing cycle since the official cash rate was introduced in 1999.

Meridian didn't immediately provide the expected size of the sale, with spokeswoman Claire Shaw saying the notes are part of an ongoing programme. The minimum investment is NZ$2,000, with additional purchases in NZ$500 increments.

Meridian, which has a BBB+ debt rating with Standard & Poor's, owns the Manapouri hydro power station, New Zealand's largest, as well as the Tekapo A and B stations which tap the Waitaki River, a system that accounts for 25% of the nation's power supply. It also owns the Te Apiti wind farm, which at 90 megawatts, is currently the biggest in the country.

The notes were first offered to Meridian's own staff in late 2008 and the current offer closes on March 31.

"The money raised through this investment programme will help us to continue to focus on our business goals, including generating renewable energy through our hydro stations and wind farms," chief financial officer Neal Barclay said.

Separately today, the company said it was gearing up for a series of new construction projects. These include the 64 MW Te Uku windfarm project near Raglan, the 142 MW West Wind project near Wellington set to come on stream in April, Central Wind and potentially Mill Creek, another wind farm near Wellington.

Meridian also has the 630 MW Project Hayes windfarm in in Central Otago before the Environment Court and is expecting an initial decision on the Mokihinui hydro project on the West Coast. It has also received an initial consent for its planned tunnel-based hydro project on the lower Waitaki River.

By Jonathan Underhill

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