Powerplay - PWC NGC

[wsheridan]

This would be a huge deal ... and probably quite good for shareholders

http://www.nzherald.co.nz/business/businessstorydisplay.cfm?storyID=3562149&thesection=business&thesubsection=energy&thesecondsubsection=fossilfuels

[donner]

NGC have to do something.

Their main business is at the mercy of consumer sentiment as determined by the pricing and marketing strategies of the likes of CEN and Genesis not NGC.

I have read the bulk of the submissions made to the commission of enquiry. Have concluded that their main business is being wagged by another dog and that a lot of hidden value in real assets is unrealized.

I am taking my opportunities as they present themselves.

[Lawso]

Apparently Vector will be in there somewhere as well. A Vector float this year looks inevitable, either on its own or as part of a new three-way combo.
I'm impressed with Powerco's go-forward - in Oz and in the North Island. A bit of good old Taranaki grunt.
Share price up over 200 today after being sluggish for a while. I bought 10k @ 160 (he said smugly). Also hold Vector 9.75% bonds.

[trendy]

I noted over the last week PWC started to move and commented on it a few days back....makes me wonder if people in the know were already acting on the news.

[trendy]

Hmm...seems most threads are off topic at the moment so lets see if this gets any comments.

I've had a close hard look at PWC this weekend and feel that it's in the early stages of a new strong short-term upward trend based on the daily charts. Weekly charts also show it having been in a slow upward trend since April 2003.

My reasons why for this are that short term MA and EMA have crossd long term MA, directional DI has crossed over ADX line and MACD is still moving upward.

C:\My Documents\My Pictures\pwc.bmp

[wsheridan]

quote:Originally posted by trendy



My reasons why for this are that short term MA and EMA have crossd long term MA, directional DI has crossed over ADX line and MACD is still moving upward.



I sometimes think you trend analysts speak a different language! :)[:o)]

[bermuda]

My thoughts exactly.Love to know what it meant but all I understand is P/E's......Wonder if Origin are having a sniff at NGC?

[trendy]

Ahhh...you fundamentalists talk another language also p/e, NTA, times covered and so on..:)

Basically we are following the same thing, if the fundies think a company is looking good or bad and start acting by buying or selling us techies will see the trend and trade it. [8D]

[trendy]

Interesting news article about Vector below would provide huge growth benefits to the regulated power co's like PWC if the Government agrees to the changes.

Source: Stuff www.stuff.co.nz

Vector seeks to compete with big power retailers
27 April 2004

Vector, New Zealand's biggest power lines company, is lobbying the Government to allow it to sell electricity in competition with the big power retailers.


Now regulated under new Commerce Commission thresholds, Vector could come under price control if its prices rise too fast or its service quality drops too low.

The company claims the new regulation means that old rules forbidding lines companies from retailing electricity are out of date.

Under the previous government, power companies were told they could not run a monopoly power lines business, while also generating or retailing electricity.

Rules about generation have since been relaxed, but Vector said it makes no sense for it to generate electricity if it can sell it only into the wholesale electricity market.

Vector is trying to have the restrictions on its power retailing lifted in the new Electricity and Gas Industries bill now before the commerce select committee.

In a letter sent to senior cabinet ministers, Vector chief executive Mark Franklin said no limits should be applied to lines companies either generating or retailing electricity.

When New Zealand desperately needed new investment in generation capacity it made no sense for a large body of potential investors such as Vector to be prohibited from investing.

The letter said Vector did not believe it would be commercially viable to invest in electricity generation without a retail involvement.

Mr Franklin said Vector was not anticipating any involvement in mass retailing, but wanted the ability to sell any power it produced to an end customer.

So-called "vertical integration" allowing lines companies to invest in generation and retailing, should be permitted.

"Recent developments, including the cancelling of Project Aqua, make it even more imperative that the Government creates a regulatory environment that facilitates the achievement of its objectives for the electricity industry."

The letter said the separation favoured by then Energy Minister Max Bradford was not based on advice from officials.

Officials, said Vector, considered the benefits of legal separation to be outweighed by the likely costs.

While separation would reduce the problems of line access and cross-subsidies, other reforms could do this, such as the threat of price control.

[wsheridan]

and do we really think the government will want to allow further competition against the likes of state-owned Meridian and Mighty River Power?

[Othello]

Hi Trendy saw yr TA reasons for for PWC then realised they were pretty close to mine :) Same as you using a MA, and DMI, but used a Momentum Indicator instead of a Macd, and used OBV to confirm volume increase which came as the first signal.
now watch me stuff it up :)

[wsheridan]

The fundies look fine:

http://www.nzherald.co.nz/business/businessstorydisplay.cfm?storyID=3562931&thesection=business&thesubsection=latest&thesecondsubsection=

[silu]

Interesting news today about local bodies wanting to sell off their PWC stake.

http://www.nzherald.co.nz/business/businessstorydisplay.cfm?storyID=3563300&thesection=business&thesubsection=energy&thesecondsubsection=electricity&thetickercode=PWC

discl. hold PWC

[skinny]

Very interesting developments here indeed. Throw into the pot the NZ treasury reccomendation to allow more market-based pricing (see the report link in the NZ engine spluttering thread) and a possible change to a National govt. next year this could be a really great buy long-term.

But for now any feel for how the sell-off will effect the share price ? Totally dependant on how it is done I suppose....

[trendy]

Thanks for the news Skinny. Very interesting indeed, this changes the playing field dramatically....question is in which direction. Keep those stops tight and hold on. :)

[wsheridan]

It is just the excuse that Vector needs to list ... and given the pricing regime I guess the government can't complain about any monopoly issues.

We might get a very big IPO out of this!

[Cooper]

What are the regulations guiding line pricing policy, if any? As these guys have a natural monopoly if there aren't any pricing regulations they must be making some fairly good money?

[J. Holmes]

Would be classic if either Vector or NGC end up with the 'Naki boys stake. PWC outbid NGC to get the UNL assets!

Regardless of this current play this company has always been a solid performer, nothing flash, just a solid annual dividend and some great core assets. Now a cornerstone shareholding is up for grabs, can imagine there will be plenty of interest, can only be positive for shareholders.

[Lawso]

Hope so, WS. If they float my capital bonds are supposed to give me the right to get shares at a 2.5% discount to the offer price. I got the bonds in October '02 and at that time Vector said a decision about a float would be made by July '03. Still waiting and hoping, Meantime, the interest payments are quite nice.

[wsheridan]

quote:Originally posted by Cooper

What are the regulations guiding line pricing policy, if any? As these guys have a natural monopoly if there aren't any pricing regulations they must be making some fairly good money?


They are effectively price controlled by Commerce Commission regulations - so no impediments there to takeover.

[Othello]

Just a question ?
if vector is thinking about a listing and aquistion couldnt it do it buy either buying NGC or PWC or both and thereby be listing thru the backdoor? saving all the hassle involved in an IPO.
I dont know anything about how all that works so would appreciate some input.
also interesting to note that vector just a little while ago says something about getting into power rather than a supply co. and next min Local council's pop up and say we are willing to sell.

[Lawso]

PWC up again today - +7c to 214, on a downhill day.

I'm no trader but I'm almost tempted to take my profit on this one - 54cps or 34% in 18 months. Or is there still more go-forward in PWC?

Grateful for any advice/opinions.

[wsheridan]

Personally I think it would be foolish to take profits in such a situation ... when's the last time you saw a major shareholder get a poor price for monopoly assets?

If you are nervous ... take some gains but leave yourself in the game.

[Alban]

Hi Lawso,

I bought PWC just over a year ago when the threat of heavy govt. regulation eased. I'm now up 50% on capital and the dividend on my original purchase is over 11% gross and growing. I'm in no hurry to sell. In fact, unless we are talking about an offer of over 250 cps absolute minimum, I will only sell if it becomes compulsory.

I agree with wsheridan regarding taking profits - history tells us that profits lie on the side of sticking with this one rather than jumping ship. Steel your nerves and ride the wave. In the unlikely event that no takeover eventuates, you will retain part-ownership of a growing monopoly company paying you a very healthy, increasing return on your original investment. You could do a lot worse than that imho.

By the way, if you did sell, do you have a better home in mind for your money?

[Lawso]

Thanks, guys. I'm sitting.

No, not offhand, Alban. Haven't been looking at significant purchases for a month or so, due to commitments - tax etc :(

The likes of AIA, CEN, FBU, WAM and the F&Ps look fully priced to me. CAV seems like good buying at under $5. And I don't think we can count on continued market gains such as we have enjoyed lately. Which means hunting out the cheapies with prospects. I'll also be looking at the Feltex IPO and will be interested to see how the NGC-PWC-Vector drama plays out.

Just random thoughts. But, to quote Barrel Scraper again, what would I know?

[trendy]

Geez...up 8c to $2.20 and climbing.

[airedale]

Not a good day to buy when the price is gapping upwards on opening.Alex Elder would advise waiting until it comes back closer to the long term moving average. If you are in then stay in, or take profits. If you are not in yet be cautious about when you enter.
Discl: Holding PWC

[donner]

People seem to be picking PWC as the main player here. I'm quietly backing the darkhorse in NGC. Today was another buying opportunity.

Sometimes you have to look past the headlines.

It's a risk because they may end up as the ugly duckling of the ball but I am picking you will have electricity retailers backed by hydro, coal and gas and each one competing for the consumer in a highly competitive market.

[Alban]

I'd say from the announcement below that New Plymouth DC is looking for offers of 250cps or more for its holding. Some of the info in the announcement is simply a repitition of info in the NZ Herald article linked to by silu above. In the event of a suitable offer being received, it's highly likely that the same offer will have to be made to all shareholders.

p.s. I'm not advocating a purchase of PWC shares to anyone who doesn't already hold. Too risky a strategy I believe, although I've no doubt a few people will be buying, hoping for a quick profit if an offer comes in.


REL: 1551 HRS Powerco Limited GENERAL: PWC: New Plymouth DC Seeking Indicative Bids on its PWC Holding New Plymouth District Council has provided the following News Release inrelation to Powerco Limited: Window of Opportunity Opens on Powerco Shares The New Plymouth District Council is seeking indicative bids on its shareholding in energy distribution company Powerco, following news of mergerdiscussions between Powerco and NGC. The merger talks have created a window of opportunity for the council tomaximise its Powerco investment by selling its shares now. The council wouldthen re-invest the proceeds in a number of alternative investments, spreadingrisk while at least maintaining current income levels. The council's 38.12% Powerco shareholding, alongside the 11.79% holding ofTaranaki Electricity Trust, which is also inviting bids, will put potentialbuyers in a position to control Powerco. In recent examples of such takeoverpositions, buyers have paid an average premium of around 25% on the marketshare price prior to the takeover announcement. The council's expectation isgreater than this due to the size and strategic nature of the Powercobusiness. Recent examples suggest that if the council sold its shares after a mergertook place, it could have to accept a discount of around 10% on market value. Mayor Peter Tennent says the proposed merger is likely to be a success basedon Powerco's active history of growth through such deals. However, in orderto achieve a position of influence in the new entity, the council would needto borrow heavily to purchase the additional shares necessary - and this isnot regarded as a financially prudent option. Mayor Tennent says: "Our investment in Powerco has been an unmitigatedsuccess and I have no doubt the company will continue to go from strength tostrength. It is a fantastic company and if we lived in an ideal world wewould stick with them and borrow to achieve a position of influence in thenew entity. "But borrowing that amount of money is just not an option. The landscape ischanging and things are getting a bit too hot for us. "So it's time to move on, and the window of opportunity is open now. If wesell before the merger we stand to gain a good premium on top of the value ofour holding. Selling after a merger could greatly reduce the chances ofsecuring such a premium. In fact, we could well have to sell at a discount. "If we simply retained our existing shareholding in the new entity, ourcurrent 38% would be drastically reduced, significantly limiting ourinfluence over the dividend income that is so important to us in keeping alid on rates. "We have taken a great deal of expert advice on this subject and we believeour best option is to sell at a premium before the merger and re-invest in arange of investments. "This will allow us to diversify our investments, taking our eggs out of asingle basket and spreading them around. The net result is that we'll have alarger, more diverse and less risky investment that yields at least the sameincome as at present. "Rest assured that we wouldn't contemplate going down this road if weenvisaged it leading to an increase in rates due to a lower level ofinvestment income." The council has instructed Pricewaterhouse Coopers to manage the sale processon its behalf and expects to consider indicative bids in early June. Moreinformation is available on the NPDC website at www.newplymouthnz.com.End CA:00099752 For:PWC Type:GENERAL Time:2004-05-04:15:51:07

[wsheridan]

IT will be interesting to see if PwC (the accounting and financial advisory firm) can extract the best value .... the Council is stuck with using them because all of the other likely brokers have a big energy company on their books already.

Maybe the government will decide it has to own another asset to stop it falling into someone elses hands [B)]

[Lawso]

So PwC is to advise on the sale of PWC. Cosy ;)

[trendy]

Intresting article in Herald today. OK you fundies what is PWC currently worth?

Invitations go out to Powerco buyers

06.05.2004
By CHRIS DANIELS, energy writer
Failed buyers of UnitedNetworks are being tapped as potential new owners of lines company Powerco.

The New Plymouth District Council and the Taranaki Electricity Trust are hoping to earn a 25 per cent premium on the sale of their 49.96 per cent stake in Powerco.

Bidders for the assets of UnitedNetworks, formerly New Zealand's biggest lines company, sold by US energy giant Aquila in 2002, will be among the first to be approached by PricewaterhouseCoopers, which is leading the sales process.

New Zealand lines company Vector, Australian energy giant AGL and several Asian energy investors are likely to be asked to bid.

PricewaterhouseCoopers partner Craig Rice, who is leading the sales process, said indicative, non-binding bids for the Powerco shares were being asked for by June 11.

A flyer issued by the company lists "key investment highlights" of Powerco, including the recently announced merger discussions with gas company NGC, "significant additional merger and acquisition opportunities in the New Zealand market" and continued expansion in Australia.

Powerco said last month that it was in "informal discussions" with NGC which had "focused on a number of potential opportunities". The talks were "simply a part of Powerco looking at our strategic options".

NGC, which is also talking to Vector, the country's largest powerlines company and potential Powerco buyer, also said discussions were only "informal". A spokesman said yesterday that the talks were continuing and had not been put on hold by news of the council's share sale.

The Business Herald understands that merger talks between NGC and Powerco have been going on for at least the past 12 months.

Vector, which is owned by a publicly elected trust, has refused to confirm its negotiations with NGC nor outline the topics of its discussions.

A majority of members elected to the trust which owns Vector are in favour of a partial privatisation and sharemarket float of the company.

Such an opportunity could present itself by the need for money to pay for the purchase of Powerco.

The New Plymouth District Council and the Taranaki Electricity Trust have been talking up expectations of a 25 per cent premium on their shares, which has raised eyebrows among many who feel Powerco shares are already fully priced.

Any buyer must, however, find more money than just the premium the council and trust expect for their shares.

All shareholders must be treated the same under provisions of the Takeovers Code - meaning a buyer must also make an offer to the other 19,000 smaller shareholders.

If the desired 25 per cent premium is offered to the council and the trust, then it's likely many other shareholders would be keen to also cash in.

The 49.96 per cent stake is worth $338 million stake at current market value, meaning any 25 per cent premium would take the asking price to well over $420 million.

Should this price also be taken up by all other Powerco shareholders, the takeover may cost at least $845 million

[wsheridan]

Some better analysis here.
The letter from the Mayor is buffoonery.[B)]

http://www.nbr.co.nz/home/column_article.asp?id=8946&cid=8&cname=News

[Benlamnz]

Despite of al the council hum and pumb about their PWC stakes, it looks like NGC is THE crown jewel and may yet be snapped up by another Aussie Co as AGL scrambles for money to buy Contact. I see sub 2.00 for PWC if that happpens.
--------------------------------------------------------------------

This from the AFR:

APT eyes Kiwi gas wholesaler

Australian Pipeline Trust is ready to do a deal with or without the involvement of Epic Energy. As the sale of Epic's Dampier-to-Bunbury has been delayed once more this week, APT chief Jim McDonald has spent time in New Zealand kicking tyres.

The asset McDonald was said to be eyeing was AGL's 66 per cent stake in NGC Holdings, New Zealand's biggest natural gas wholesaler.





view graphic






That equity stake in NGC, which is traded on the NZ Stock Exchange, is now worth about $NZ713million ($618million). It's priced on a multiple of 14.4 times forecast earnings for 2004, on Credit Suisse First Boston's numbers.



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As AGL is running against Origin Energy for Edison Mission's 51 per cent stake in NZ energy generator and distributor Contact Energy, it may well want to sell another asset or two.

The talk has been for some time that AGL would be happy to sell its position in NGC Holdings, at the right price.

McDonald will no doubt have little trouble discovering what the right price is in negotiations with AGL, the company from which Australian Pipeline Trust sprung in 2000.

The market is already geared up for an equity placement when APT does get its next deal done, which is why the trust's units have been relatively flat in recent weeks.

And if AGL is looking to make a sale, NGC Holdings will probably not proceed with talks to merge with NZ's two biggest electricity distributors, Powerco and Vector.

NZ's New Plymouth District Council said earlier this week it would seek indicative bids for its 38.1 per cent stake in Powerco, the country's second-largest power distribution company, by early June.

Taranaki Electricity Trust has also said it would sell its 11.8 per cent stake.

[Alban]

PWC 19/05/2004 GENERAL REL: 1716 HRS Powerco Limited GENERAL: PWC:
Global Interest in New Plymouth Council's Powerco Shares New Plymouth District Council has provided the following News Release inrelation to Powerco Limited:

The availability of a large number of shares in energy distribution firm Powerco is generating considerable interest in the global marketplace. At noon today (19 MAY), some 20 potential buyers from North America, Asia, Australia and New Zealand had expressed an interest in the shares.

New Plymouth Mayor Peter Tennent says the high level of interest "is hardly surprising given Powerco's impressive track record and the substantial number of shares for sale". With the expressions of interest phase now complete, potential buyers have until mid-June to make indicative bids for NPDC's 38.16% Powerco shareholding, as well as the 11.79% stake owned by Taranaki Electricity Trust(TET).

"Assuming those bids are attractive, we will then short-list a small number of parties to undertake due diligence, after which we will receive finalbids," says Mayor Tennent. "If everything goes well, we will seek to lock in a purchase agreement by the end of July."

Probity auditor appointed NPDC has appointed prominent chartered accountant Roy Tiffin as probity auditor for the sale of the council's shares, to ensure a due and proper process is developed and followed. A separate probity auditor will be appointed for the sale of TET's shares. Mr Tiffin has exceptional experience in his field, with nearly 40 years ofauditing in England, South Africa and New Zealand, and five years as director of Audit New Zealand where he was the auditor of several local authorities. He is first vice-president of the Institute of Chartered Accountants of New Zealand, a Fellow of the Institute of Chartered Accountants in England and Wales and a Fellow of the Institute of Chartered Accountants of New Zealand.

[Benlamnz]

-7.5% in one afternoon. any legal eagle out there have an idea of how bad is this for business? I understand this is only a draft right? Does that mean any vector or PWC play is now dead? and if the CC is taking a stance like this, why did the SKC christchurch deal went thru? and is this an indication of what would happen to the re-proposed Qantas Air NZ deal?

NGC
21/05/2004
COMCOM
REL: 1300 HRS NGC Holdings Limited
COMCOM: NGC: Commission Recommends Control in Draft Report - Gas Enquiry
The Commerce Commission today released its draft report relating to its
current Gas Pipelines Inquiry. The Commission commenced the Inquiry
following a request from the Minister of Energy pursuant to Part IV of the
Commerce Act.
Under the Commerce Act, the Commission is required to consider whether:
* competition in the supply of gas pipeline services is limited or likely to
be lessened; and
* control is necessary or desirable in the interests of acquirers or
suppliers of gas pipeline services.
Commission Chair Paula Rebstock said if the Commission was reporting to the
Minister today, it would advise him to recommend to the Governor-General that
an order in Council be made imposing control on two gas transmission
businesses and three gas distribution businesses.
"Today's draft report reflects the Commission's current position on whether
or not to recommend control in the gas industry. The Commission issues a
draft report to assist understanding of the Inquiry and to add transparency
to the Commission's decision making process," said Ms Rebstock.
"The process also allows the Commission's preliminary views to be consulted
on by all interested parties and allows for further submissions and input.
The Commission encourages interested parties to make submissions on the
Commission's draft report and to present those submissions at a public
conference to be held in July.
"Based on what we currently know, the Commission's preliminary view is that
NGC Transmission, Maui Development Limited, NGC Distribution, Powerco Limited
and Vector Limited all face limited competition in the gas pipeline services
they provide and that there are likely to be net benefits to acquirers from
the introduction of control," said Ms Rebstock.
In relation to Wanganui Gas Limited, the Commission's preliminary view is
that it is not necessary or desirable, in the interests of acquirers for the
gas pipeline services supplied by Wanganui Gas to be controlled. In relation
to Nova Gas Limited, the Commission's assessment to date has found that Nova
Gas faces workable or effective competition in the market where it provides
gas services and has therefore not recommended control in its draft report.
The Commission's established process includes the release of a draft report,
which is followed by a public submission process and conference before the
Commission makes its final recommendations to the Minister of Energy.
Ms Rebstock explained the Commission's preliminary recommendations were based
on its assessment of the potential benefits to acquirers of control and the
potential costs to acquirers of control.
"In making its recommendations, the Commission must balance the benefits of
control against the costs of imposing control."
A copy of the Commission's Executive Summary is attached. The Commission is
required to deliver its final report to the Minister by 1 November 2004. It
is for the Minister to decide whether to recommend to the Governor-General to
make an order declaring control.
The Inquiry timetable confirmed today is as follows:
Draft Report released by Commission: 21 May 2004
Written submissions on draft report due: 2 July 2004
Conference on Draft Report: 22,23, 26-28 July 2004
Cross submissions following conference due: 13 August 2004
Final report provided to Minister of Energy: By 1 November 2004
Media contact: Jackie Maitland, Communications Manager, Phone work (04) 924
3708, mobile 029 924 3708
Commission media releases can be viewed on its web site www.comcom.govt.nz
End CA:00100439 For

[Alban]

The six-month share price average is around $2.00

A "good premium" to that could not be less than 10%, unless Mr Rice's definition of "good premium" is markedly at variance with common usage.

Hence we are looking at bids of over $2.20 at the moment.

Interesting the rumours that Vector is still sniffing around.

Maybe selling out at $2.14 would have been the right thing to do a couple of months back, Lawso, if you had a good new home for the money.

I'm still hoping for $2.50, but I now believe $2.25 to $2.35 may be the most likely outcome.


__________________________________________________ __________________

True to its word, electricity company Vector was not among potential buyers of Powerco to register interest with sales agent PricewaterhouseCoopers late last week.

Yet market sources were still not discounting a structured play for Powerco from the Auckland-based lines company outside the bid process.

Powerco shares fell 11c midweek amid nervousness over the outcome of the bidding process. They climbed back to $2.09 on Friday when PWC told the New Plymouth District Council it was comfortable with indicative non-binding bids received from local and overseas interests.

PWC partner Craig Rice said the bids were at a "good premium" to both Powerco's asset backing and the company's six-month share price average.

He said a shortlist of buyers for the 53% stake owned by the council and the Taranaki Electricity Trust would be prepared, with a final sale decision in about six to eight weeks.

Confirming Vector was not among the potential bidders, he said: "If anything else is going on we certainly don't know about it."

On Friday one market source said rumours persisted Vector was still interested in a merger to increase the combined entities' share price as synergies were realised.

"The New Plymouth council and Taranaki electricity trust could then sell out and realise the premium they are seeking in much the same way Brierley Investments exited Sky City in a hugely successful mini-IPO in the late '90s," said the source.

Another market source was also insistent of Vector's continuing interest in Powerco.

One scenario was that a smaller local power player might bid for Powerco with an understanding it could onsell to Vector later.

"We really don't know just how this will play out, but be assured Vector will be there at the end of the day," he said.

http://www.stuff.co.nz/stuff/0,2106,2954118a13aT,00.html

[Benlamnz]

WW and others:

Looks like we are looking at close to 2.35 afterall:

PWC
02/07/2004
GENERAL
REL: 0843 HRS Powerco Limited
GENERAL: PWC: Potential Buyers of Council Shares Short-listed
The New Plymouth District Council has provided the following news release:
The New Plymouth District Council tonight unanimously agreed a short-list of
bidders for the possible sale of its shares in Powerco.
Mayor Peter Tennent is confident of achieving a satisfactory final offer for
the council's 38.16 per cent holding.
"And once we get to this point, we'll be able to take our eggs out of the
single basket that is Powerco and spread them within a managed investment
portfolio," he says.
"PricewaterhouseCoopers advise us that this portfolio will give greater
diversity, reducing the risk invariably associated with a solitary
investment, while ensuring that we at least maintain the dividend income
levels we currently receive from Powerco, for the long term benefit of the
community."
As with all decisions on council investments, tonight's unanimous vote was
based purely on sound professional advice. Mayor Tennent says: "This council
prides itself on the fact that it leaves emotion and politics out of the
arena when making investment decisions.
"We take a pragmatic, business approach based on a single goal - achieving
the best outcome for the ratepayers of this district. It's this approach that
has helped our investments to perform so well, helping us as a council to
keep our rates so low."
Subject to the agreement of Taranaki Electricity Trust and Powerco Wanganui
Trust, who are also considering selling their Powerco holdings, advisers
PricewaterhouseCoopers will now conduct further work on refining the
short-list of indicative bids selected.
At the stipulation of the bidders, their identities will remain confidential.
End CA:00102159 For:PWC Type:GENERAL Time:2004-07-02:08:43:11

[Benlamnz]

On a related matter. It seems like the power cosolidation this year is focused on the ownership of NGC, not CEN. According the the NBR's shoeshine, AGL will exit NGC at $3+ (damn sold out at 2.62), and the potential takers include Vector, Aussis pipeline trust, overseas investors, and PWC, at that order. It is noted that because the current PWC balance sheet is already heavily geared, and deal with NGC must be raised from outside equity, either issuing new shares, or a loaded buyer buying both the council stake and NGC in one stroke. Exciting times ahead no doubt...

[willy_wonker]

quote:Originally posted by Benlamnz

WW and others:

Looks like we are looking at close to 2.35 afterall:



The interesting thing is that there are a number of bidders for PWC. More than one buyer usually means higher price as they compete with eachother. A large existing power company can add value by cutting cost using existing management to run PWC. Losing tax credits is not a major issue as the buyer will be leverage their book to buy PWC.

The power sector is consolidating, which is good for the sector in terms of revenue.

[Alban]

The sale of New Zealand's second biggest networks company is moving forward, with its two biggest shareholders committing to the sale.

Taranaki Electricity Trust yesterday committed to selling its 11.8 per cent stake in Powerco, said Craig Rice, a partner at PriceWaterhouseCoopers, running the sale.

That follows a vote by New Plymouth District Council on Thursday to sell its 38.1 per cent stake.

Mr Rice said the two organisations had committed to continuing with the sale and selling "if the price is right" for their combined 49.96 per cent.

To speculation that Vector might still be interested in Powerco, Mr Rice said: "Vector is not participating in our sale process."

Vector has had talks with gas pipeline and wholesaler NGC Holdings about a merger.

PriceWaterhouseCoopers was not revealing the number of indicative bids it has following more than 20 expressions of interest.

Companies speculated to be indicative bidders for Powerco include Australian Gas Light (AGL), Australian Pipeline Trust and Origin Energy.

Analysts have their money on AGL also being a frontrunner to buy Contact Energy, also up for grabs after Edison Mission Energy put its 51 per cent Contact stake on the block along with its other international power assets.

Under New Zealand law, AGL could not own both Powerco and Contact because legislation prohibits a firm owning an electricity generation and retail business and an electricity lines business.

Competition issues might be raised if AGL bought Contact and kept its 66 per cent stake in NGC because it would mean AGL controlled two companies with exclusive entitlement to buy the rest of Maui gas.

Market analysts speculate AGL would seek to sell its NGC stake to resolve that.

http://www.stuff.co.nz/stuff/0,2106,2960244a13,00.html

[wsheridan]

I'd sell my other power interests to get into any Vector deal. It is one float that would definitely succeed because the politics of it mean it couldn't go any other way.

I'd love to be a financial analyst in the power sector at the moment - finding assignments must be like shooting fish in a barrel.

And I wouln't an energy analyst at the Commerce Commission ... the pressure will be intense

[foodee]

Any guesses as to what is going to happen to NGC?

disc: hold

[Benlamnz]

won't be down for too long. It still has two suitors in Powerco and Vector. Moreover price underpinned by strong yield. Now that the last power generators up for grabs is gone, AGL may built its future plays with NGC instead of flogging it.

[wsheridan]

http://stockwatch.nzherald.co.nz/announcementdetail.asp?GMC=100&ArticleId=103851


Very good underlying result from NGC today.

[foodee]

Benl
Powerco is pretty heavily geared so unlikely to be able to do much. Prime is stretched swallowing PWC and therefore probably won't see any initiative for the time being.
Vector is in play but has some internal political issues to iron out.
Therefore sold out of NGC for 3.00 today - gees! have I done the right thing - too late.;)

[donner]

Smarties say to buy the bonds. Get a ten percent discount on any float price and a guarantee of supply in sought after float over and above what they will dish out to the mums and pups.

[wsheridan]

quote:Originally posted by foodee

Benl
Powerco is pretty heavily geared so unlikely to be able to do much. Prime is stretched swallowing PWC and therefore probably won't see any initiative for the time being.
Vector is in play but has some internal political issues to iron out.
Therefore sold out of NGC for 3.00 today - gees! have I done the right thing - too late.;)


My gut feeling is that you might have cause to regret that.
Believe there are plenty of talks still going on, and meanwhile the fundamentals look very good.

[foodee]

Wsh
You could be right. NGC has been an excellent share. Got in when it was below a dollar and have topped up a couple of times. It is one of 'strange moments'. Hope to get into Vector if it comes into play.

cheers

[donner]

Plenty of talks alright. THe CEO made mention of it today. Reitirated need for growth and that nothing was finalized. Its all just a waiting game and when your'e earning over 11% in divis, well, I can wait.

[Lawso]

As a holder of PWC, CEN and Vector bonds, I'm awaiting the next act in this drama. As for PWC, while not planning to make any decision until I've read Prime's offer document, my brain cells have been grinding away and arrived at this conclusion:

Smart people (eg PIF) don't buy bad companies. They see good prospects there. So why would you sell? Only if the offer was too good to refuse. 215 is not too good to refuse. And why would you sell good shares for junk bonds?

I'm sitting on the shares, which I got for 160 :)

Lawso anybody that will take the same offer that has been accepted by the councils IMO needs their heads examined including the council representatives that negotiated it.

[airedale]

Governments usually sell taxpayers assets too cheaply......Telecom,Contact,etc.
Local body politicians likewise.
I'll hold on to my PWC,thanks.

[Jim]

No way I am going to sell my parcel to this Australian. I am holding it till the END [}:)][}:)][}:)]

[boring]

PWC is one of my core holdings, and it is a significant proportion of my long-term, slow but steady growth portfolios.

I'm heartened by the posts here stating intentions to hold to the very end. Just out of self-interest, I don't what to sell because it will be one less quality, well-managed companies listed on the NZX and I'll have to find another home for my funds.

I also don't want to be stuck with these hopeless junk-bonds at a low 8.5% yield. No prospect of capital growth and at a rate that carries almost zero risk premium for these instruments. I can understand the councils selling PWC to diversify their portfolio, but to receive 37.5 per cent of junk-bonds yielding a fraction more than the current dividend yield of the share - what a bunch of morons.

I presume the other offers on the table weren't 100% cash offers for the shares. If the council wanted to diversify their portfolio, why don't they just drip-sell a portion of their holdings on the open market. You won't get a premium on share price, but at least you won't end up with lousy debt instruments that have a yield that doesn't justify their risk.

I can't believe we pay rates to keep these turkeys in their jobs. Those junk-bonds ... what a lousy deal.

[Benlamnz]

Prime is paying 10 times EBITDA, which is considered full and even slightly excessive by Aspect Huntly, reason being they are pitching for a 100% takeover. This imply that had it been sold to a buyer happy with a 53% controlling stake, they may well pay less than what Prime came up with. There hasn't been any notable rival bidder, and the current PWC business with the current yield, is unlikely to command a shareprice much more than 2.10. Moreover, with the NGC merger talks now stalled due to change of ownership, and that both PWC and Prime's balance sheets are fully geared, growth by aquisition, which PWC relied on over the past decade, is unlikely to make anymore significant progress.

[boring]

So the councils sell their 53% stake at a premium, but end up with effectively getting their 19.87% holding back in junk bonds yielding a lowly 8.5% in a rising interest rate environment. And they still need a 7% yield on their effective 33% shareholding cash sale: "in order to achieve an annual return of NZ$19.3 million - our most recent dividend from Powerco". A further 7% yield would indicate investments in further high yielding, low-to-moderate capital growth companies similar to PWC anyway.

PWC would no longer need to undertake a "growth by acquisition" strategy anyway. Already a major infrastructure player, it's short to medium term strategy would be to "steady the ship", growing earnings by increasing productivity and organic growth, as well as bedding down the gas venture in Tasmania.

Who's getting the deal here ... Prime or the Councils ?

[trendy]

I note that since the announcement there has been a noticable increase in volume with PWC. I'm second quessing but it looks like someone is building up a stake in PWC. Yet on the other hand no SSH notices - yet. Not sure what to make of it, I don't believe that we have ma and pa investor out there buying up, so can only conclude that someone wants to get to the magical 10%.

What do you "expert" chatters make of it?

[airedale]

Hi Trendy,those were my thoughts too. Volume well up on recent averages. Somebody may be building a strategically significant stake.

[airedale]

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Small shareholders have options in power plays
30 August 2004

By TERRY HALL
Three cheers for the new takeover code. It is giving real choices to small investors and financial institutions when controlling shareholders sell out.


If you don't like the look of the new owner – or the terms of the takeover offer – you can sell. Or you can sit tight and chances are the company will remain listed on the Stock Exchange. In the bad old days the powerful players with controlling stakes and deep pockets could do cosy deals with one another – and ignore the interests and rights of other shareholders. Now they have to offer the same terms to everyone.

As a result of recent deals involving Contact Energy and Powerco – and possibly NGC – it looks as if the Stock Exchange will retain a healthy array of popular energy stocks offering solid dividend yields.

It also suggests that shareholders who decide to stick with these companies may have a chance to be involved in the long-expected rationalisation of the non-government-owned companies in this sector.

Talks on this are in abeyance. This follows changes in the controlling stakes in Contact and Powerco. And NGC's major stakeholder, AGL, has decided to quit New Zealand apparently due to the collapse of a grand plan to link up with Vector, Powerco and Contact.

A lot has happened in this sector in the past few weeks . . . though the managements of the three Kiwi companies remain in place.

Australian firm Origin Energy bought Edison Mission's controlling stake in Contact Energy for a modest $5.67 a share. This was a higher price than AGL was prepared to pay, but a lot less than Kiwi shareholders thought it was worth.

Australian investor Prime Infrastructure is buying control of Powerco for the equivalent of $2.15 a share. This follows a strange decision by New Plymouth District Council, the Taranaki Electricity Trust and the Powerco Wanganui Trust to sell their combined 53 per cent stake without waiting for the result of the merger talks with NGC, which might have added value to their holding.

The Taranaki-Wanganui groups (and their advisers from a big accounting firm) seem to be the only ones who think they got a good deal. The Powerco share price has steadily wilted to $2.03 by Friday from a recent peak of $2.20. This is because other shareholders don't like the deal. Many are likely to receive part-payment in low-ranking (meaning somewhat risky) securities that yield 8.5 per cent rather than cash.

AGL of Australia said last week that it was putting its 66 per cent stake in NGC on the market. In a curious statement, AGL implied that NGC shares, at $2.98 on Thursday, were priced right. AGL is telegraphing to the mark

[zac]

Hi Airedale; please take time to edit your copy and paste before submitting - it makes reading much easier. Cheers.

[Benlamnz]

Prime can live with 51%, in the prosepctus they actually assume the returns from PWC at 16C per share- exactly as the current yield, thereofre these guys are buying on the conservative basis that they are happy to just collect dividends, and help out here and there in the Tasmania and Queensland pipes with future expansions. The joker in the pack is that, should NGC be bought by an ambitious overseas buyer who wants to merge PWC to complete the North Island jigsaw, Prime can sell their stakes at way over $2.15.

[airedale]

Hi Zac,You are quite right about editing,I am just getting the hang of the cut and paste business.

[weasel]

can someone explain to me this depth on pwc
0 205 206 98137
138,086 204

is the bid at 205 for zero shares an undisclosed buyer or is this just a ****up by ASB securities. Cheers, wease