Wind of change as Trustpower plans a split

OPPORTUNITIES: Dr Bruce Harker, Trustpower chairman, with chief executive Vince Hawksworth on site at Snowtown windfarm in South Australia.PHOTO/SUPPLIED

The board of Trustpower is proposing to split the Bay of Plenty-based powerco into two separately listed companies.

Under the demerger proposal, announced yesterday, NewCo would be set up to house all of Trustpower's existing Australian and New Zealand wind assets and its wind and solar power pipeline.

The other company, Trustpower Core, would hold the remaining generation and growing multi-product retailing businesses.

These businesses produce strong cash flows, so it was expected Trustpower Core would continue to provide shareholders with regular dividend income with growth prospects over time, the company said.

Chief executive Vince Hawksworth said the proposal had been under consideration for some months and reflected the potential it saw in the Australian renewable market.

"It is pretty clear the opportunity in Australia is going to be real," he added.

Trustpower is already the biggest wind power generator in South Australia and has a significant pipeline across the Tasman.

Mr Hawksworth said there had been several positive recent signs regarding its Australian renewables policy, including a more supportive political climate towards clean energy under new Prime Minister Malcolm Turnbull.

Wind projects required large amounts of capital to develop and a demerger of Trustpower Core and NewCo would provide Trustpower shareholders with choice in relation to capital allocation.

"In order to pursue that opportunity and develop our pipeline, Trustpower needs to be able to fund it," said Mr Hawksworth. "As time rolls along, we will have potentially quite different businesses, and prospectively different investors might want to look at them."

Trustpower chairman Dr Bruce Harker said Trustpower had a strong track record of developing wind assets in Australia and New Zealand.

"Given the significance of the opportunity in front of us, we have been considering the most efficient way to fund the next phase of the wind development pipeline over an extended period.

"The proposed demerger would enable Trustpower to create two new businesses with clearly defined strategies, and provide investors with the flexibility to choose which parts of the business to invest in."

If the proposal is given effect, shareholders would receive one share in each of NewCo and Trustpower Core for each share held in Trustpower.

Trustpower Core and NewCo would be listed on the NZX and NewCo may also be listed on the ASX. Dr Harker will be stepping down as chairman of Trustpower to become designate-chairman of NewCo and lead the team developing the new business.

Paul Ridley-Smith has been appointed to fill the director position and as board chairman.