Vector Limited (VCT)

[Sideshow Bob]

Any picks on their profit which is out in the next couple of days?

[Gryffyn]

bet they'll want to make it look smaller :-)

[Toddy]

That won't be that difficult to do. Just whack through a big provision for future payments back to Wellington customers.

[Gryffyn]

Bring it on - I would love a power bill reduction/rebate.

[beacon]

Well said SSR. Another fiasco all right!

[kura]

Extract from NZ Herald article, why would anyone invest in infrastructure, if your max return can't be more than 7.35% (Rabobank, pays that much on their call account, and they are supposed to have a higher credit rating than NZ govt, see their website)

..................
Meanwhile investor outrage at the threat of control continued yesterday, especially the view that Vector should not be allowed to earn a return on its assets of more than 7.35 per cent.

[zac]

Surely this depends on the value and revaluation of the assets. 7.35% may be plenty if assets are appreciating in value. (cf. AIA) Someone else may be able to explain how the lines network is valued.

[duncan macgregor]

quote:Originally posted by zac

Surely this depends on the value and revaluation of the assets. 7.35% may be plenty if assets are appreciating in value. (cf. AIA) Someone else may be able to explain how the lines network is valued.

Assets such as land and buildings go up in value. Lines, poles, pipes, depreciate in value. I think 7,35pc is unrealistic for any business in this position. Farming for instance has about 4pc return on capital investment, but makes up with a higher than inflation capital gain. To borrow money for a farm, a house, or factory, its the capital gain that counts VCT have very little of that. macdunk

[kura]

VCT have now released a copy of their lawyers letter to Commission, an interesting (and lenghty) read, I suspect the letter cost more than my entire VCT holding, and this is just the start of the stoush.

[kura]

Gee now their credit rating has been downgraded
this is going from bad to worse.

VCT
11/08/2006
CREDIT

REL: 1545 HRS Vector Limited

CREDIT: VCT: Vector's credit rating impacted

The ramifications of the Commerce Commission's intention to declare control
on Vector's electricity network services have extended to Vector's credit
rating outlook.

Today, Moody's investment services affirmed Vector's Baa1 credit rating, but
has changed its outlook from stable to negative.

Vector Chief Executive Mark Franklin says the regulatory uncertainty arising
from the Commission's actions has implications for all utility companies and
the entire economy.

"I note in particular Moody's comment that 'regulatory stability is a key
rating driver for electricity distribution companies'."

"A company's credit rating has a direct influence on the cost of borrowing,
which can further undermine the economic viability of an investment," Mr
Franklin says.

For more information contact:

Philippa White
External Communications Manager
Ph 021 579 522
09 978 7638