IFT - Infratil

[Toddy]

Game on. The next few weeks should be interesting.

Infratil eyes key holding in TrustPower
07 September 2006
By MARTA STEEMAN

A $515 million stake in leading electricity company TrustPower is up for grabs after an American shareholder announced it was retreating to its home market.
Local investor Infratil looks likely to vie for the key 23.8 per cent holding in Tauranga-based TrustPower with international investors.
Alliant Energy of the United States announced yesterday it was selling its New Zealand subsidiary, Alliant Energy New Zealand, which holds 23.8 per cent of TrustPower and a 5 per stake in Infratil.
The New Zealand investments are the last of Alliant's international investments to be sold.
TrustPower shares rose 8 cents to $6.85 after the announcement.
Infratil already owns 35 per cent of TrustPower and has controlled it with Alliant for three years.
TrustPower is one of New Zealand's five big electricity generator-retailers.
It has about 30 small hydro power stations and a big wind farm, and has 220,000 electricity customers throughout New Zealand.
A purchase of the 23.8 per cent stake will trigger New Zealand takeover rules, obliging the buyer to make a takeover offer to all TrustPower shareholders on the same terms.
But a takeover bid would have little chance of success because Infratil and the Tauranga Energy Consumers Trust, with 28.6 per cent, said yesterday they were long-term shareholders in TrustPower.
Other options for a buyer to avoid making a takeover bid include seeking approval from TrustPower shareholders to hold 23.8 per cent.
Infratil, as an associated party with Alliant, would not vote.
Another option would be for the buyer of the TrustPower stake to keep 19.9 per cent and sell the other 3.9 per cent.
Asked if Infratil would be a bidder, he said: "It's a question we can't really answer at the moment.
"I think there's a price level at which Infratil would be interested.
The buyer would have to step into the shoes of Alliant under the investment agreement till it expired in March 2007.
Alliant Energy International president John Peterson said the stake could be sold to one trade buyer, to several, or to a consortium of buyers. ABN Amro was exploring putting together an institutional syndicate.
Alliant would like to complete the sale 30 to 60 days before the end of the year but that depended on what approval processes were needed.
At yesterday's market price of $6.86, the stake is worth about $515 million.

[Snow Leopard]

Been on the up since the Toddys' post.
It will be interesting to see which way the TrustPower sale unfolds, but independent of that IFT is not getting the attention it deserves.
i.e. I think that it is worth holding onto my stake in this company.

[Caesius]

Agreed. No one seems to be talking about this stock. What's with the super high P/E?

[Snow Leopard]

Infratil is one of those companies for which the P/E is a totally meaningless KPI.
This is a company which invests in other companies and accounting profits/losses swing widely depending on whether they have sold anything and what they sold in the current financial year*.
[Note to self: to what extent will IFRS change this?]
Meanwhile the dividend is not that bad so it is a question of whether you believe that IFT are investing in the right areas for future growth.

*there is no substitute for having a grip on what your investments actually do and reading and understanding the financial bits of the company reports

[Rif-Raf]

In the meantime, they have enjoyed a tidy little gain (part realised) on the run up from last weeks news on their POT holding.

Did anyone read the interview with one of their managers talking about the potential of the Kent deal. Basically reiterating the point that given the value of airports servicing London, long term upside potential is massive making it a good punt. My feeling is that in years to come there's a good chance that we could be looking back asking how they managed to buy such a strategic asset for basically next to nothing. This is one of the reasons why PE is not that useful when measuring this stock

[Caesius]

Thank you Rif-Raf, PT.

That is, really a very useful bit of info; P/E isn't always meaningful. I'm off to ponder it.

[Caesius]

This a breakout?

[Snow Leopard]

depends whether you believe in: flags, pennants, banners, symmetric triangles, assymmetric triangles, wedges, wedgies, resistance levels, support levels, arbitrary levels, making the data fit the facts, making the facts fit the data, one size fits all, no size fits anyone, uptrends, downtrends, no trends, trading ranges, efficient markets, inefficient markets, insider trading, outsider trading, inside-out trading, outside-in trading, tops, double tops, triple tops, head and shoulder patterns, wearing you top inside-out, wearing your top outside-in, bottoms, double bottoms, wearing your pants inside-out, wearing your pants outside-in, cup and saucer patterns, cup and handle patterns, mugs, bottles, drinking from a cup and saucer, drinking from a mug, drinking straight from the bottle, any of the stuff that kittydashword posts, any of the stuff that phaedrus posts and lastly but by no means leastly any of the stuff posted by Paper Tiger.

Edit: knew I would not get it all right first time

[Rif-Raf]

Who knows, the market's been strong this week.
I'm sure the Alliant/Trustpower situation is the key driver of activity. The TPW price has been a bit weaker, one way or the other I'm sure their exit will create an opportunity for IFT with that investment. The other issue that I beleive was weighing on the SP was bird flu fears which you don't hear much about these days.

[COLIN]

I think the market has also been a bit concerned at the likely effect on Wellington Airport's profits if Quantas/Air NZ get approval for their code share scheme which they seem to be doggedly pursuing.