By NZPA
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Monday 9th September 2002 |
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Final bids for the sale of the top 10 company. either in toto or in parts, close at 5pm today and an announcement would be made shortly after.
The company's share price fell 9c to 941 today after it rose 20c to a record high $9.50 on Friday, putting the company's market capitalisation at $1.4 billion.
The share price has risen 24 percent since June 10 as buyers have speculated a strong takeover price will be offered.
The company, which controls nearly a third of New Zealand's electricity distribution, is not saying how many bidders have been short-listed and is running a due diligence process both for the total company and for parts.
The buyer or buyers will have to take a punt on what the crucial regulatory regimes for electricity and gas will be when they place their final bids.
UnitedNetworks chief executive Dan Warnock acknowledged there would be no clear idea on the electricity regulatory regime that would apply to lines companies or on the key related question of how electricity and gas assets would be valued before final bids are due tomorrow.
Electricity and gas networks form the bulk of UnitedNetworks' assets, valued at $2.28 billion on the company's books.
But the company may be sold as a whole or through separate sales of the electricity, gas and telecommunications assets.
Speculation is mounting that Chinese billionaire Li Ka-Shing's Cheung Kong Infrastructure will bid for all of UnitedNetworks, adding it to the nearly $A6 billion ($NZ7.07 billion) of energy assets it has bought in the past two years in Australia.
His empire includes telecommunications giant Hutchison Whampoa, Chinese ports and other energy assets.
Local bidders are expected to be Auckland electricity lines company Vector and Natural Gas Corporation for the gas assets.
It remains to be seen if Vector bids for the entire company and if it has plans to sell some assets to other players such as PowerCo, an electricity and gas distributor, or to Wel Energy which expressed interest in the Waikato lines network.
Bidders will be aware that UnitedNetworks' parent Aquila Inc is a weak seller and is cashing up assets in a bid to hang on to its investment rating. Aquila owns 70 percent of UnitedNetworks.
Stock in the debt-laded Aquila has recently plunged to a 22 years low after the US utility owner said a credit downgrade to junk status would trigger debt and collateral costs 45 percent above an earlier estimate.
Aquila, the fourth-biggest US utility owner, has tumbled 92 percent in the past year.
UnitedNetwork's Mr Warnock said: "We have given our sense of what we think is a good regulatory regime.
"I think based on that, they (bidders) have got to make a line in the sand judgment on which way it is going and what does it mean for UnitedNetworks."
The commission had given notice that a discussion paper on valuation of electricity assets was not going to be out for several months, he said.
Electricity companies had told the commission that issues such as disclosures and valuation had to be co-ordinated to be part of a regulatory regime.
But the commission was maintaining its October 1 date for "coming out with something on a targeted regulatory regime" even though the asset valuation methodology question had not been resolved.
For electricity lines companies the critical issues are the components of the targeted regulatory regime based on thresholds and what will be permitted returns on assets.
Another key question is whether the present optimised deprival valuation (ODV) methodology for electricity and gas assets will remain or whether a different valuation methodology, possibly historic cost of assets, will be used for regulation purposes.
UnitedNetworks paid twice ODV for its North Island gas network and up to twice ODV for electricity networks.
Mr Warnock said how long it would take to announce the successful bidder or bidders depended on the types of bids.
"If they're clean who knows how long it takes but if they are complicated that will take longer," he said.
One analyst said it was difficult to understand the business case for an international company buying UnitedNetworks.
Local energy companies could extract synergies and staff savings in combining their businesses with UnitedNetworks'.
The Ministry of Economic Development's energy policy head, Tony Fenwick, said the final papers on the gas review to Energy Minister Pete Hodgson were about three weeks away.
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