BBI cedes control of Powerco to get sale through

Under revised terms of the transaction, Australian fund manager QIC will acquire 58% of Powerco's New Zealand business, up from the 50% originally offered. The price of the 58% stake is $423 million.

BBI agreed to suspend dividends and distributions while the "cash sweep" is in place and accept an increase of about 200 basis points in the interest rates it pays until such time as its balance sheet is strong enough to warrant a investment grade credit rating, it said in a statement.

"Closing the Powerco transaction is the first step of our objective of reducing corporate debt" via assets sales and deferral of distributions, managing director Jeff Kendrew said.

Shares of BBI gained 2.9 cents to 7 Australian cents on the ASX and are down 95% in the past year. The company said on completion of the sale today it can now release its first-half earnings tomorrow.

BBI has lined up assets for sales to reduce its debt burden. Other asset earmarked for sale included WestNet Rail and BBI Euroports.

Powerco is New Zealand's second-largest electricity and gas distributor after Vector.

By Jonathan Underhill

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