Buller Electricity to lift Pulse stake to 65%

Tuesday 21st June 2011

Buller region electricity network owner Buller Electricity is to lift its stake in electricity retailer and smart meter company Pulse Energy to 65%, after Pulse was unable to raise capital privately.

Pulse managing director Dene Biddlecombe today said the company had been relying on the financial support of Buller Electricity for several months, but that arrangement was unsustainable.

Pulse had been unsuccessful in its latest attempts to raise capital privately, given recent volatility and lack of understanding in electricity markets by potential investors, Biddlecombe said.

Under the deal now being proposed, Buller Electricity would lift its stake in Pulse from the current 8.5%.

Buller Electricity would provide a guarantee of $9 million for two years. Pulse would pay a guarantee fee to Buller Electricity through an issue of 54 million shares at 5c each.

Buller Electricity would also capitalise $1.12 million of existing loans owed by Pulse at 5c per share.

Pulse would undertake a rights issue to raise $7.5 million at 5c per share, with Buller Electricity committing to invest $5 million under the rights issue.

Convertible note holders would be asked to agree to have 25% of the value of the notes restructured into a five-year interest free loan, and to convert the balance of the notes into ordinary shares at a rate of three shares for every one note held.

As Buller Electricity would lift its stake in Pulse to at least 65%, approval by Pulse shareholders would be sought.

Biddlecombe said that completing the capital raising was essential to putting Pulse back on a sound financial footing and allowing it to get through its current cash crisis.

Pulse had reached its 2010/11 target of 23,000 customers from 3000 a year ago, and was on track to reach a new, conservative goal of more than 54,200 customers by the end of the 2013 financial year.

Pulse shares are listed on the NZAX alternative market, and last traded in early March for 38c.

NZPA

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