NGC Back in Play

[Bilo]

At 12.20 Buyers want 140,000 sellers have 14,000 to sell. How high will Vector go?
:)

[Bilo]

This from the NZ Herald Saturday Feb 5. Speculation on $1 per share more?

"Pipelines prowler lying low

05.02.05
By PAUL PANCKHURST and AGENCIES


The mystery prowler around the gas pipelines company NGC remained unidentified last night after failing to snare a 10 per cent stake to block energy giant Vector's takeover ambitions.

One of the top suspects in sharemarket chatter was failed NGC bidder Genesis Energy, a state-owned power retailer and generator. But chief executive Murray Jackson said: "Not us."

That will disappoint some sharemarket players anticipating keen entertainment if a state-owned venture were to be caught punting taxpayer money to block a takeover by another public entity, Vector.

An investment banker said: "It would be interesting, politically, if they had been dumb enough to have done this."

Adding to the mystery of the failed Thursday night bid to build a blocking stake was the price offered by sharebroker Citigroup - $3.22 a share, or only a 4 per cent premium on that day's closing price.

"Naive" was one assessment, meaning: far too low.

The suspect list in news reports has extended to Origin Energy, state-owned generators Meridian and Mighty River Power - or maybe an international hedge fund. Names were being plucked from that air.

Vector's offer to mop up the minority shareholders at $2.91 closed yesterday, doomed to fail.

NGC shares have traded above the offer price since the bid opened and closed yesterday at $3.13.

Vector bought Australia Gas Light's 66 per cent stake for $2.91 a share - or $877 million - last year but needs full ownership to integrate the businesses. That means getting to 90 per cent - the level for compulsory acquisition.

Citigroup called NGC investors, including Alliance Capital and Walker Capital, on Thursday in the hunt for shares.

At Alliance, fund manager John Norling said: "The whole game is to see how much more money you can get Vector to pay."

An attraction of NGC stock is the likelihood of Vector enticing minority shareholders with a follow-up takeover bid that includes rights to buy shares in its planned sharemarket float.

Vector has a one-year funding agreement for $350 million with investment bank ABN Amro as part of its NGC acquisition.

Norling said investors were betting the cost of the funding would encourage a float sooner rather than later - and that Vector wanted full ownership of NGC before that.

"They do seem to have somewhat painted themselves into a corner in terms of the timeframe they've given themselves."

Sharemarket sources confirm Brook Asset Management is the largest minority shareholder in NGC, with 3 to 4 per cent.

At Brook, principal Paul Glass said: "We do actually believe it makes a lot of sense for Vector and NGC to be put together because there are synergy benefits which we assess to be $20 million per annum."

By his calculation, that translated into $160 million of value for Vector.

"There are about 160 million outstanding NGC shares which Vector do not own, so there's up to $1 of value per share in those synergy benefits." "

[shasta]

Interesting article, roll on the Vector subsequent offer to NGC minority shareholders.

To fund their debt they need to extract maximum dividends & will need 90% acceptance to realise the synergies of VCT/NGC.

Expect an announcement by the end of the month!

[Bilo]

Not much interest in this topic yet but thought that I would update it anyway.

07/02/2005
TAKEOVER

REL: 1729 HRS NGC Holdings Limited

TAKEOVER: NGC: VECTOR OFFER FOR NGC NOW CLOSED

Vector today announced it had acquired 67.2% of NGC Holdings Limited (NGC)
following the closure of its offer on Friday 4 February.

Under the New Zealand Takeovers Code, Vector made an offer on Tuesday 7
December 2004 to purchase 100% of the ordinary shares of NGC for $2.91 per
share.

In addition to the 66.05% stake acquired from Australian Gas Light Company
(AGL), Vector received acceptances from 1,713, or approximately 11%, of
shareholders for 5.1 million shares. This brings Vector's total holding in
NGC to 297.6 million shares or 67.2%. The total consideration paid by Vector
is $865.8 million.

Vector chairman Michael Stiassny says the company is comfortable with the
level of ownership it has achieved in NGC.

Mr Stiassny says the company is today still receiving acceptances post-marked
Friday 4 February and will update the market again should outstanding
acceptances significantly change its current shareholding.

[Bilo]

NZ Herald 08.02.05
By CHRIS DANIELS

Prospects of a new bid for NGC by Vector are already being canvassed after the energy network company's disclosure that it snared just 1.2 per cent of shares in its below-market takeover offer.

NGC, which owns gas pipelines, is now 67.2 per cent owned by Vector. It bought 66 per cent from Australian energy giant AGL last year.

Despite a scattering of newspaper advertisements, Vector has not pushed its takeover publicity hard. It had little chance of convincing shareholders to sell at $2.91 a share when the sharemarket price has consistently been about $3.10.

NGC shares closed yesterday up 2c at $3.15.

All eyes are now on what "plan B" will be. Should Vector stump up extra money and launch a better offer to mop up the remaining 32.8 per cent of shares, or just sit and wait?

Shareholders hoping for a better price to be offered - along with the prospect of preferential treatment in the Vector share float - may simply be left hanging by a Vector happy to proceed with a full takeover much further down the track.

It is understood any new offer - whether at a higher price or including new rights in any share float - will also have to go before the fractious Auckland Energy Consumer Trust, which owns 100 per cent of Vector on behalf of Auckland power users.

After a legal fight, the plan to buy NGC and privatise part of Vector was approved by the trust, despite three of the five members being opposed.

Chairman Warren Kyd used a casting vote to push the plan through, after trustee John Collinge was barred from voting.

Alliance Capital fund manager John Norling said he did not expect to hear anything from Vector until NGC's interim financial results, due on February 22.

Vector has now paid $865.8 million for its stake in NGC. Chairman Michael Stiassny said the company was comfortable with that level of ownership.

Vector must now decide how much it is worth to the company to fully merge its operations with NGC.

This will undoubtedly bring great cost savings - Stiassny has said dividend payouts to power-using beneficiaries will double after the merger.

This will be despite the dividend stream now being shared with the new shareholders, who will own 24.9 per cent of the company.

Vector has promised to float before the end of this year - when a bridging finance facility with merchant bankers ABN Amro is due to expire.

Independent valuer Grant Samuel last year said the full, underlying value of NGC shares was in the range of $2.50 to $2.76, well below the $2.91 being offered by Vector.

NGC's directors even recommended that their shareholders accept the offer - subject to their own personal circumstances.

They said there was no guarantee the NGC shares would continue to trade at current levels once the takeover offer was gone.

Although it looks cheap now, the original offer price was "in line" with the market price immediately before the AGL-Vector purchase deal

[Bilo]

Opened today with one seller of 400,000 at 3.40
Sellers came lower and NGC traded at up to 3.30 finishing the day with a late sale at 3.25 - Well above 2.91.

Is it in Vector's interests to go for 100%?

[moimoi]

What i find absolutely amazing is that there were 1700 punta's who sold their shares to vector @ 2.91......they would have received more by selling on market.

I can only presume that these are the types of people who have done their gift shopping for next christmas already.


And So 33% of us are holding out.........you do wonder what this will bring us...however one doesn't hold much hope of the trust making any rapid decisions.

:Dmoi

[shasta]

Moimoi

Nothing short of preferential treatment in the IPO/or a scrip offer will pry me away from my NGC shares.

Surely its the only way they will ever get 90%+.

I'm not so sure they have the cash/debt facilities to up the offer price?

Still picking some announcement of VCT's intentions this month.

Remember the last minute raid for a blocking stake, means possibly more to play out in this saga?

[CAM]

quote:Originally posted by shasta

Moimoi

Nothing short of preferential treatment in the IPO/or a scrip offer will pry me away from my NGC shares.


What if they state, categorically, that there will be NO preferential treatment? Because isn't that the reason most are holding on to NGC???...just in case. So if they remove that potential carrot then people may be better off to sell to them. Can't see why they didn't do that to start with, would have given their takeover offer a better chance I feel.

I am one shareholder that was never going to accept $2.91 for my shares unless forced to buy idiots that would accept that much giving them 90% If any had been offered on market at that price I would have increased my holding.

[Bilo]

From NGC’s 2004 accounts annual earnings were $80M but cash flow was $165M. Vector cannot use this money as its own unless it owns 100% of NGC.

NGC’s existing gas entitlements are 310 PJ, much of this was obtained at low wholesale prices that existed before the gas shortfall and rising prices.

NGC’s earnings are loaded towards the next few years because of the Maui and Kapuni gas entitlements. 42PJ of prepaid Maui gas alone could return more than NGCs 2004 earnings for each of the next three years (assuming current price estimates of $6M to $8M per PJ). And pre paid gas must be like holding the joker as you can choose when to use it.

IMO VCT cannot afford a long squeeze of minority shareholders. (Like no-dividend-TTP or some of BIL’s formative raids.) Bumper cash flows in the next few years will have to be shared with minority shareholders, unless Vector moves to 100%.

IMO VCT is likely to move early (as early as the Trust will let them) to acquire all of NGC.

CAM: IMO there will be preferential treatment.

Shasta:
The cash flow from NGC would allow them to up the offer price.
As much as I liked the idea of a blocking stake to lift the cash price, I think those holding enough shares in NGC that could form 10% will want-to/have-to hold VCT script. With the Trusts promise of preference to Auckland consumers, VCT bonds and NGC (potentially blocking) share holdings they will be delivered shares. Hopefully not numbers of nebulous unlisted unpriced rights to VTC shares, if the rest of us have to take them.

[CAM]

quote:Originally posted by Bilo

CAM: IMO there will be preferential treatment.



But I ask why should they? What makes you think so?
I mean with the number of Auckland consumers plus bond holders and the general anticipation of the float its not likely they are going to have any trouble getting the share float away. I would imagine it will be hugely oversubscribed especially given the performance of CEN that joe public is likely to use as a comparison.

[Bilo]

CAM
Preferential treatment: why should they? What makes me think so?

Firstly, I doubt whether VCT consumers would come up with the sort of money that VCT want. $900M reqd; 300,000 customers; $3000 for each and every one? Minority shareholders of NGC include most of the big NZ shareholding funds who will come up with over a billion for VCT to use, and ensure that any float is oversubscribed. They could also block takeover of 100% of NGC if they weren't going to get preferntial treatment from VCT. A continuing minority position wouldn't maximise returns to either VCT or NGC minority shareholders.

VTC cannot use NGC cash flow to pay interest on their significant loans without NGC paying dividends which have to be paid to the other 32.8% shareholders and are subject to tax in shareholders hands (I don't suggest that I understand the potential tax angles). VCT will be limited in the level of dividend that they can extract from NGC.

NGC is a very good company:
Solid growth prospects in every business stream (including wholesale gas despite what Grant Samuel say);
Strong cash generation;
One of the highest dividend yields of NZSX listed companies;
Excellent assets, some are monopoly positions.

VCT has an number of synergies with NGC but will not be able to realise savings in these until it owns 100%. These include interests in energy metering, asset maintenance throughout NZ, customer relationships throughout NZ, energy trading. Some benefits will begin to flow to NGC from the VCT relationship but 32.8% or more will go to NGC minority shareholders.

True, VCT don't have to do anything as both companies are very profitable, hold monopoly positions and could just sit and possibly push up prices. I doubt whether the Trust could condone that when they could do so much better (for their stakeholders). Municipal power companies used to be fat cats, paying huge salaries to inefficient workforces and kept putting prices up to meet increasing costs. Thankfully times have changed. The generation companies, lines companies and retailers compete for customers and have become relatively lean and mean. They make excellent profits but service and reliability have improved out of sight.

[Bilo]

Those few of us who follow NGC can look forward to a half year report tomorrow. This first report with Vector as majority shareholder. As the sole listed beneficiary of Maui gas, other than market star CEN, expect a solid performance. The VCT influence (Is there an independent board member left?) should ensure that it is reported conservatively. Look for disclosure of sales growth, earnings performance, and continued fantastic cash flow.

Forecasts of a dividend payment (or change in policy) would be interesting as the dividend due tomorrow was paid before VCT took their stake, for tax efficiency.[^]

Also look for:
News on Kupe gas processing by NGC?;)
An update on Kahili field gas no-flows?
Progress on energy metering
Indications of Gas sales, margins, and pricing.

But don't expect anything on a new offer from VCT from NGC.

[Bilo]

Well very little information posted to the market but a wealth of detail included on NGC's web site including Phil James' web cast. It will take some time to assimilate it all.

And a additonal dividend! The business generates so much cash - $100M for the half year.

Interesting to hear that NGC bought spot gas to conserve Kapuni & Maui gas entitlements hence lowering margins on gas trading - down $9M on last period but to be fair there was less gas traded.

NGC has positioned itself (as an Energy Services Business and less wholesaling molecules) to require less gas in future years, flattened its gas entitlements and therefore pushed profit (and retained NGC's competitive advantage) into future years.

Growth opportunities in all businesses:
3rd pipeline from Rotoworo to Auckland.
Kapuni is obviously taking Kupe gas processing opportunity very seriously.:D
Gas gathering from Taranaki onshore fields - high hopes for Cardiff and others "potentially exciting news for indigenous gas in the next few months"
LPG business "stunning"
Metering poised for growth beyond NZ.

Also $100M in deferred tax which may benefit the company in future years once this is worked out with the IRD.

Isn't this great for VCT.

[Steve]

New-look NGC set to lose freedom (http://www.nzherald.co.nz/index.cfm?c_id=3&ObjectID=10112226)
Despite having transformed itself into a smaller and more profitable company NGC now faces the prospect of being swallowed by new shareholder Vector.

It is all going to plan...

[shasta]

Um remember VCT is comfortable with 67%...YEAH RIGHT!

Additional dividend was a nice wee bonus too!

[Bilo]

How is it that a block of 5.5M shares (about 0.75 of 1%) are traded before 4:00pm on a day that the Trust is meeting to decide on a float? It is hard to believe that both parties were not in the know before the announcement.


At 5:50pm the announcement:

"The Auckland Energy Consumer Trust (AECT) and Vector Limited are pleased to confirm that the company will be proceeding with an Initial Public Offering later this year.

It is expected that the company will list in late August/early September and will release a prospectus in June.

The IPO will provide AECT beneficiaries with an opportunity to share in the offer and to also further benefit from the future growth and success of Vector.

It is also likely that the IPO will contain an offer to minority NGC shareholders.

AECT chairman Mr Warren Kydd says the Trust is very pleased to be able to finally end the long-running speculation on Vector's future.

Vector Chairman Michael Stiassny says the company is excited about its future and is looking forward to listing later in the year."

Lets hope that the offer doesn't confuse the rights of those who are both NGC holders and AECT beneficiaries like the leaked draft.

Will Grant Samuel be retained for another go at the target company valuation? And who qualifies as an independent NGC director now?

These should be interesting times. On past performance a good straight offer to all would be a welcome change. Perhaps too much to hope for.

[trendy]

Spent some time today looking over the short/medium term charts of a lot of the NZX listings and noticed that NGC stood out as having a strong upward trend against the prevailing out going tide of most other listings. What do you other TAer's think? Looks like a buy to me.

[Paper Tiger]

Wearing my TA hat I agree with you, there is also CEN and BRY that I can remember off the top of my head

Doing a quick change to the FA hat, which has a broader brim, then remember that NGC is part owned by the Vector empire, who would like to own more.
Vector bought a majority stake in NGC, at no great premium to the market price, but holding NGC at the moment is seen as one of the ways to an allocation of Vector shares in the forthcoming IPO (which is due within a couple of months?). Other ways are to hold Vector bonds, which are very popular at the moment, or be a Vector customer.

SO NGC is in play.

[Bilo]

"No public pool" should make things interesting and may explain some larger purchases of NGC over recent weeks. The question remains as to how a VTC share will be related to an NGC share. A priority for JAFFAs, bond holder's and NGC minorities over other institutions will also add interest, but how could this be managed?

In this morning's 10.05.05 Herald:

Vector's float a broking bonanza


By PAUL PANCKHURST

The initial jostling is over for the spoils of the share float of Auckland energy giant Vector - New Zealand's biggest initial public offering since Contact Energy in 1999.

The booty for sharebroking firms is likely to be 2 per cent to 2.5 per cent of the $550 million to $650 million expected to be raised by selling 24.9 per cent of Vector - $11 million to $16.25 million.

Two firms look set to get the biggest shares.

The Business Herald has been told Goldman Sachs JBWere will take a leading role, as adviser to Auckland energy giant Vector and its owner, the Auckland Energy Consumers Trust.

That will surprise some, as Goldman Sachs was the adviser to gas company NGC when majority shareholder Australian Gas Light put its 66 per cent stake in NGC on the block last year.

That was the stake bought by Vector for $880 million.

The Business Herald was told ABN Amro, the investment bank that advised Vector and part-funded the buy, would be the lead manager for the float.

Neither appointment is yet formal - but insiders depict suggest done deals.

A source said pitches for at least two co-manager roles were likely soon.

A prospectus is to be registered in late June and the company may list in August.

Under the terms of ABN Amro's financing, Vector would face a penalty fee - believed to be $8.8 million - if it failed to float and then repay ABN Amro by mid-October.

The share offer is expected to be in stages to three key groups:
1. the Auckland power users who are the beneficiaries of the consumers' trust,
2. Vector bondholders, and
3. minority shareholders in NGC.

NGC shareholders will be offered Vector shares for their own as part of Vector's efforts to secure full ownership of NGC.

"There is unlikely to be a public pool," a source said.

Bilo could it be a takeover offer of Vector shares for NGC shares

[Bilo]

Enigma
There has always been a suggestion that VCT would include VCT shares in an offer for the rest of NGC. I am uncertain of the correct numbers but there are about 260,000 beneficiaries of the AECT who must be offered shares, $307M of VCT bonds with rights for $150M VCT shares, and NGC minorities with current mkt value $400M. As indicated there will be no public pool and shares will be tight. The indications are pretty loose as to how much 25% of VCT will raise - estimates have been between $600M and $1100M. The simple answer to your question appears to be: Yes - if there is enough script - NGC holders may need some cash as well.

[Lawso]

NGC today reports net profit for 9 months is up 4.4% on the pcp. I don't hold NGC and have no particular interest in it but am intrigued by the coy's statement that there would be no dividend beyond those already issued during the period, which totalled 12cps.
How does this square with the NZ Herald share table, which states that NGC pays a gross div of 33.58c for a yield of 10.3c. Does this mean a whopping div in the final quarter?

[kura]

Any dates out for vector float yet ? or is "latter in year" as specific as we get ?

Disc AECT beneficiary, eagerly awaiting more news.

[shasta]

Lawso, they paid 8.5c & 10.5c last year & the 9cps prior to Vector buying out AGL + the extra 3cps means around 31cps + imp crs over the last 12 - 18 months. Normally around 19cps + imp crs would be around 9% yield at present.

[Lawso]

Thanx

[sekrub]

Anyone heard anything that could have prompted the jump in
NGC shares?....up 12c so far, that's at 1630 hrs.

Or just punters seeing accumulation as an entree to Vector.

[Bobby_Fischer]

Was wondering the same thing. Volume is too big and buying too regular for any ordinary punter. Now close on a million crossed with last offmarket sale at 3.45

[Bilo]

Most of $600m Vector float already earmarked
NZ Herald 03 June 2005

""Less than a sixth of the $600 million being raised in the Vector float will be offered to Mum and Dad investors and pension funds will receive virtually none of the shares, a source says.
The initial public offering in August of a quarter of New Zealand's largest power and gas lines company will be the biggest to hit the stockmarket since the $1.1 billion Contact float in 1999.
Most of it had been allocated to Vector customers, Vector bondholders and NGC minority shareholders, the source involved in the deal told Dow Jones Newswires.
[u]Institutional investors would receive virtually none of the shares on offer and would have to scramble to buy stock on the market after the listing. </u>
The IPO pricing and other details would be announced at the end of this month but the shape of the offering was becoming clear, the source said.
"The size of the IPO is going to be very close to $600 million, if not spot on," he said.
This was in line with most expectations since Vector's owner, the Auckland Energy Consumers Trust, announced the float in April.
Vector would use the proceeds from the IPO to pay for last year's purchase of two-thirds of gas lines company NGC for $877 million.
"The Vector prospectus is likely to be registered in the next three weeks, and the offer should kick off at the beginning of August," the source said.
There wouldn't be a book-build process to set the Vector IPO price, he said. "It will be a fixed price offer and be announced at the end of this month."
About $150 million of the money raised by the IPO will go to Vector bondholders, who have a priority right, according to the source.
Up to $200 million would go to the electricity line company's beneficiaries, he said.
The Auckland trust has more than 290,000 beneficiaries from the former total catchment area of the Auckland Electric Power Board, which became Mercury Energy. Wellington customers of Vector are not beneficiaries and will not receive entitlements in the float.
Another big chunk would go to NGC shareholders through Vector's entitlement offer aimed at acquiring the rest of NGC it did not own, the source said.
Financial institutions such as pension funds would have "virtually no stock" from the IPO.
The public pool, too, was likely to be small.
"Because we are doing the IPO through a range of different entitlement pools and exchanges, there won't be a lot of stock left, hence it is going to be very tight," he said.
"To the extent there's any stock left, it will be offered to the public and it will be less than $100 million." "


Bilo analysis:
One Third of NGCs market capitalisation is at current prices valued at ~$500M. It would be surprising if any of VCT's issue was available to the public as on the basis of the above article less than half of the value of an NGC shareholders stake could be met with VCT shares including the up to $100M that could be offered to the public. The remaining "minority shareholders" in NGC are probably a reasonable representation of core NZ major investors? - does any one know who is left out?

The NGC shareholdings do mean that there will be strong institutional shareholding in VCT without a "public pool". Holding NGC shares appears to be the only way a foreign resident would gain VCT shares until after the float. Why would AECT give shares away to other than these three groups and risk not getting all of NGC? At these levels VCT will need to offer around $250M of cash to NGC shareholders holding ~150M NGC shares (mkt val $500M) in addition to VCT list share entitlements.

[Bilo]

Interesting article in todays newspaper, and posted on the Vector thread.

"Vector's IPO prospectus expected by month's end
09 June 2005
NGC shareholders have been warned that the current high share price may cause Vector to make only a partial takeover offer for the company."

As an NGC shareholder I did not receive any notification nor was there any statement to the NZ stock exchange.
Who issued a warning?
Is this blatant ramping through the media?
By whom?
And what is their position?


Also:
"Credit Suisse First Boston also raised the possibility that Vector would only make a partial takeover - happy to get less than the 90 per cent ownership necessary to take complete ownership."

It has always been an obvious approach to offer a sweetner to NGC's minority institutional shareholders with an offer of Vector shares to get Vector close to or over the 90% holding, moving later to compulsory acquisition. Any "public" offering of Vector script would almost certainly achieve this favouritism of some NGC shareholders over others. Only the takeover panel could stand in the way. It would seem entirely within character for Vector and advisors to try one on again.

[Bilo]

Now that the prospect of 3000PJ of gas in Mangatoa has subsided the gas price should move more quickly up towards the projected imported price.

NGC's rights to 300+PJ is looking better. If Contact was paying $4.7M per PJ in 2004 (from March 2005 interim report) how long will it be before the wholesale price looks more like $6 -$8M per PJ? Grant Samuel didn't put a price on NGC's gas assets in their Target Company Statement calculations. Pre-paid gas looks better than ever.

It might be better for NGC shareholders if VCT can't come up with a generous offer and isn't successful with the takeover for another 2 years.

Bilo NGC is a good bet you win either way. $4.00 would be nice.

[Bobby_Fischer]

From NZX:

NGC Holdings Limited (NGC) advises that it has received advice from Vector Limited stating that Vector intends to provide to NGC today a notice of intention to make a full offer under the Takeovers Code for all shares of NGC.

The last trade was 20% above the price Vector offered last year. Be interesting to see how much more they think it's worth now - if they are serious about getting to 90% would seem they will need to dig quite a bit deeper. If there is a non cash component we may also get some insight into pricing of Vector scrip.

[Bobby_Fischer]

NGC Holdings Limited (NGC) advises that it has received a notice of intention (Takeover Notice) from Vector Limited to make a full offer under the Takeovers Code to minority shareholders of NGC.

The offer is to purchase all shares in NGC not currently held by Vector. Vector currently holds 67.2% of the total 442,788,722 issued NGC shares.

Vector's Takeover Notice advises that NGC minority shareholders will be offered a total consideration of $3.40 per NGC share, comprising fully paid Vector ordinary shares having an aggregate issue price of $2.62, plus a cash payment of $0.78.

The Takeover Notice advises that the issue price of the Vector shares will be equal to the lower of $2.38 and the final price at which the Vector shares are to be issued under Vector's Prospectus and Investment Statement, both dated 27 June 2005, excluding the discount to this final price at which holders of Vector's capital bonds may acquire Vector shares pursuant to Vector's Initial Public Offer.

Vector's Takeover Notice also states that overseas shareholders of NGC will be offered a cash economic equivalent to the offer made to New Zealand resident shareholders. Vector has been advised that the Takeovers Panel has approved the granting of an exemption to permit cash to be offered for NGC shares held by an overseas shareholder - one with a registered address in an overseas jurisdiction.

The Takeover Notice states that the cash sum payable will be the sum of:

- the cash component of the consideration that would have been paid to the overseas shareholder who accepts the NGC takeover offer if that overseas shareholder had a registered address in New Zealand, plus
- the cash derived from a nominee selling through the NZSX the shares that would have been issued to that overseas shareholder if that overseas shareholder had a registered address in New Zealand, less
- brokerage costs and taxes, if any.

It also advises that the offer to NGC minority shareholders is due to open on 11 July 2005, and close at 5.00pm on 10 August 2005, unless extended.

NGC is responding to the Takeover Notice in accordance with the Takeovers Code, including by the provision of a Target Company Statement and the appointment of an Independent Adviser to report to NGC minority shareholders on the merits of the offer.

The NGC Board Committee of Independent Directors, comprising Mr Richard Bentley (Chairman), Mr Rick Bettle and Hon Fran Wilde, is overseeing all aspects of NGC's response to the Takeover Notice.

The Independent Directors advise shareholders to await the arrival of the Target Company Statement and Independent Adviser's report before responding to Vector's takeover Offer.

[Bobby_Fischer]

The offer is receiving a standing ovation from Mr Market - after NGC minorities and bondholders get their shares will there be anything left for the rest?

IPO docs available for download right now at: http://www.vectornetworks.co.nz/investor_relations/ipo.php

NB. The full investment statement is a large and s ... l ... o ... w ... download.

At what price would you sell on market rather than accept takeover

[Bobby_Fischer]

That, I think, will need to wait for the learned opinion of Grant Samuel or Cameron and Co (doesn't anyone else do these target company statements?). From the point of view of potential Vector investors, this will, usefully, also have to contain a valuation of that company. Mind you, on the topic of company valuations, wasn't the earlier NGC offer ($2.91) deemed "fair and reasonable", and look where we are now.

Bobby Fischer I think a valuation by sharetrader posters would be far more accurate

[Bobby_Fischer]

Yeah, but could you find two ST posters who agree on a valuation (see Telecom thread!)?

You are right though that some of these T/O valuations do look incredible with hindsight - remember the 2001 Edison Mission T/O offer for CEN? At the time $4.25 was considered "fair and reasonable" by Grant Cameron and the board recommended the offer be accepted. I don't think much has changed in the electricity market that couldn't have been foreseen at that time (after all "foresight" is, to some extent, what these guys collect their fat fees for), so why the massive disparity with the price today?

[Bobby_Fischer]

quote:Originally posted by ENIGMA

Bilo NGC is a good bet you win either way. $4.00 would be nice.


Last sale $3.90. $4.00 looming.

[2 Dogs]

quote:Originally posted by Bobby_Fischer


quote:Originally posted by ENIGMA

Bilo NGC is a good bet you win either way. $4.00 would be nice.


Last sale $3.90. $4.00 looming.


Is a 23% IPO premium realistic? Maybe, as non AECT constituants, bond holders or NGC shareholders will take up the entire offering and all otheres will miss out.

Looks like Vector will have to increase the offer.

[Bobby_Fischer]

Don't agree with you ENIGMA (though it would be very nice if you were right) - the price pressure on NGC comes from the undelying demand for Vector shares - NGC is part of the "grey" market in Vector Power.

Bobby_Fischer but what happens if everybody sits tight. I was thinking of possibly selling at $4.00 but will hold out for more now. there has to be a huge premium fo Vector to make acceptance worthwhile.

[Lawso]

I reckon it would be a waste of time to apply for an allocation of Vector shares under the public offer. After bondholders, AECT beneficiaries, NGC holders, instos and favoured clients of the lead broker, there'll be none left for the public.

So, after dithering for a week or so I finally decided today to buy some NGC when the price came back to 380. This represents a premium of 40c over the theoretical value, but I figure that's probably no more - possibly less - than the stag margin when Vector lists.

With the allocations I'll get as a bondholder (@ 5% discount) and as a beneficiary, the premium I'm paying for NGC comes back to only about 20c. And this way I'm assured of getting a decent slice of Vector instead of having to wait and wonder and maybe have my cheque returned at the end of it all.

[Dazza]

lawso could get the 5% discount?

and afta u have brought NGC, how do u apply for the take up of the vector shares?!

[Lawso]

1.The price of the shares being offered to holders of Vector capital bonds will be the lower of $2.32 and 97.5% of the final price.There has been some trading in the bonds lately, with people paying a premium on the bond price to get a guaranteed number Vector shares at a discount price.
2. Existing NGC holders will have already received the Vector takeover offer. To sell they simply complete and return the acceptance form. New shareholders like me will receive details of the Vector offer well before it closes on August 10.

[Bilo]

The Vector Investment Statement shows VCT at 100% of NGC with borrowings of $2,500M and an annual Interest bill of $230M.

Underlying the Grant Samuel TCS and Vector IS financials is a hugely positive cash flow for VCT. VCT earnings are $580M on revenue of $1,150M. This is more than 50% of revenue. It is potentially a fantastic return on assets. Depreciation and Intangible Asset amortisation are not cash outflows so VCT has a significant opportunity to reduce debt. If we add to that NGC’s gas entitlements, particularly entitlements over the next couple of years including prepaid Maui gas, then cash flows will be massive over the next couple of years.

Grant Samuel used price to earnings multiples to determine value without spelling out the effect that these high cash flows will have on these multiples over a very short time. Vectors share price should appreciate considerably.

A price to earnings ratio of 20 with half the current debt would have Vector shares closer to $5, not $2.38. No prospective cash flows are included in the investment statements (Grant Samuel is consistent with their earlier poor effort in not attempting to value NGC’s gas entitlements) but it would appear that Vector could halve this debt in a couple of years, if they wanted to. Vector shares look like being a very good investment.

NGC at $4.00 is potentially a cheap entry to VCT.

[moimoi]

Punters,

is there much point in delaying one's acceptance of vectors takeover offer? most of the conjecture seems to suggest that it is a done deal.

if one holds out....and they reach the threshold regardless and your NGC shares get compulsorily accuired....does one still get the same offer as is currently outlined ie: cash and vector shares??

cheers
moi

[whatsup]

Oui

[moimoi]

vector @ 86%....cut off day today....i assume the big instituitions will accept at 4pm and get them over the line.??

[Adam]

NGC
10/08/2005
TAKEOVER

REL: 1755 HRS NGC Holdings Limited

TAKEOVER: NGC: Vector signals move to compulsory acquisition

Vector today announced that it will now move to compulsorily acquire the
remaining shares in NGC Holdings Limited after receiving acceptances in
respect of its offer for NGC shares which, when aggregated with Vector's
existing shareholding, exceeds 90 per cent of NGC's shares. All conditions in
the offer were fulfilled or waived by Vector.

The announcement comes after its Takeover Offer to NGC shareholders closed
today (Wednesday 10 August 2005).

As a result of the successful offer, Vector also today announced that the
company has brought its plans to list on the NZSX forward to Monday 15 August
2005.

Vector chairman Michael Stiassny says the company has had an excellent
response to its offers and is looking forward to making its debut on the NZSX
next week.

Mr Stiassny confirmed that, of the $592 million worth of shares being issued,
$380 million would now be allocated as part consideration under the NGC
acquisition. Capital bondholder entitlements that have been taken up through
the offer totalled $140 million, leaving $72 million available for allocation
to AECT Beneficiaries.

He also confirmed that, given that the AECT Beneficiary offer was
significantly over-subscribed, the closing date for the General Offer had
been brought forward and it is now closed and that the Institutional Offer
and the Primary Market Participant Offer, all of which form part of the
Vector Share Offer, would not proceed.

Holding statements will be sent to Vector shareholders early next week.
Alternatively, shareholders can contact Computershare on (09) 4888 777 from
Monday 15th August regarding their allocations.

Application has been made to New Zealand Exchange Limited ("NZX") for
permission to list the shares in Vector Limited, and all the requirements of
NZX relating thereto that can be complied with on or before the date of this
announcement have been duly complied with. However, NZX accepts no
responsibility for any statement in this announcement.

ends

Contact:
Charlene White
External Communications Manager
Ph: (09) 978 7638
Mob: 021 512 829