Powerco shareholders support purchase of network assets

By NZPA

Wednesday 30th October 2002

Powerco shareholders yesterday endorsed the $810 million purchase of UnitedNetworks Ltd assets, a move described by Powerco chairman Barry Upson as historic and very significant.

There were no dissenting voices when a special meeting called by Powerco in New Plymouth voted to acquire jointly with Hawkes Bay Networks Ltd, UnitedNetworks' Eastern Electricity Business for $590 million. Those electricity network assets are in Tauranga, eastern and southern Waikato, Thames, and Coromandel.

Hawkes Bay Networks Ltd will acquire the network assets in Rotorua and Taupo. Powerco is also buying UnitedNetworks' Central Gas Business with network assets in Wellington, Horowhenua, Manawatu, and Hawkes Bay for $220 million. Shareholders approved debt-funding arrangements necessary for the purchase of the energy assets.

"This is another important meeting in the history of the company," Mr Upson said.

"These acquisitions are a very significant, very major transaction. The proposals are the result of several weeks of concentrated effort, negotiating with several parties to reach a result that we are extremely pleased with."

Mr Upson predicted that Powerco's net after-tax profit would rise from $33 million in 2001-02 to $36.3m the following year and $53.6m the year after that. There would also be enhanced dividends. Powerco was expected to enter the NZSE40 index after the completion of funding arrangements, said Mr Upson.

The company had targeted a Standard & Poor's long-term rating of BBB+ on completion of the takeover.

Chief executive Steven Boulton said the acquisitions would make Powerco the largest energy-distribution company in New Zealand in terms of network length, and the second largest in terms of consumer connections.

After the acquisitions, Powerco's total asset base would almost-double to $1.7 billion. Powerco's three largest shareholders are the New Plymouth District Council, the Taranaki Electricity Trust, and the Powerco Community Trust. Together they hold about 68 percent of Powerco's shares.

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