Last of National's SOE sell-downs gets share bonus offer to help keep stock in local hands

Shares in state-owned power generator and retailer Genesis Energy will be priced in a $1.35 to $1.65 range and include a one-for-15 loyalty bonus share offer as a sweetener for New Zealand investors, the Government says.

Finance Minister Bill English says the proportion of shares to be sold is to be announced on March 26. The Government has previously said it would sell between 30 per cent and 49 per cent of Genesis Energy.

John Key on the partial sale of Genesis Energy

Prime Minister John Key has confirmed the Government will go ahead with the partial privatisation of Genesis Energy over the next month or so but has underlined the sale will be the last one under a National Government.

Based on the indicative price range, implied gross dividend yield for the prospective 2015 financial year was forecast to range from 13.5 per cent to 16.5 per cent. Genesis is expected to list on the NZX on April 17.

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The bookbuild will be on March 27 and 28, the final price to be announced late on March 28.

English said that to encourage New Zealand investor participation, Kiwis who bought shares and held them for a year would be eligible for one loyalty bonus share for every 15 shares held, with a cap of 2000 bonus shares.

"The process will allow the Crown to determine the expected demand from the various investor pools, at which point we will decide and announce the level of sell-down for the bookbuild process," said State Owned Enterprises Minister Tony Ryall.

Bill English on Genesis Energy and State housing sell off

The Government has announced its Genesis share offer will proceed next month but it may sell less than the 49 per cent offered if there is not enough demand from potential buyers in a "front end bookbuild".The Government expects to sell between 30 per cent and 49 per cent of the shares in genesis. When the programme was first mooted, the government said it would offer up to 49 per cent of power companies.

The loyalty bonus issue is more generous than the one employed for last year's float of Mighty River Power, which involved a two-year wait for bonus shares, issued at a ratio of one for 25. The Meridian offer involved instalment receipts.

Chairwoman Dame Jenny Shipley, asked at a news conference about her ability to serve the company after her involvement as chairwoman of failed company Mainzeal, said she enjoyed the support of Government ministers. Chief executive Albert Brantley said he believed investors would be "pleasantly surprised" on closer examination of Genesis Energy, which has been variously described as the "runt of the litter" or the "ugly duckling" of state power generators.

John Key comments of rising power prices

Big rises in household power bills are largely because of higher charges from Transpower to recover the cost of recent national grid upgrades, says Prime Minister John Key. Consumers in Wellington and Auckland have recently been told by power companies, including Genesis and Meridian, of big increases in their daily fixed charges which are only partly offset by small decreases in per unit charges.

The company was a truly diversified business, capable of coping with a range of wholesale electricity market conditions, and it had the largest customer base of any of the generator/retailers.

The company's investment statement forecast a net profit of $41.8 million for the year to June, more than doubling to $95.4 million in the June 2015 year.

The difference reflected some one-off charges in the current year combined with weak wholesale powers prices brought on by unusually high rainfall over 2013.

Genesis owns Huntly power station, Tongariro power scheme and other assets.

Genesis float
* $1.35 to $1.65 range for share price
* 1-for-15 loyalty bonus share offer
* April 17 listing on NZX expected.

Read the full Genesis Energy share offer statement here


Genesis Energy

2012 Revenue: $2.270 billion
2012 Net Profit: $90 million
Government expects to raise between $700 million and $1.1 billion from selling a 49% stake.

Operates a mix of thermal and renewable power stations with a total capacity of 2141MW:

• Huntly thermal power station - gas/coal.
• Tongariro power scheme, Taupo - hydro.
• Waikaremoana power scheme, Wairoa - hydro.
•Tekapo A &B, Mackenzie Country - hydro.
• Hau Nui, Wairarapa - wind.
• Holds a 31 per cent stake in the Kupe (off the Taranaki Coast) - oil and gas.

Chairman: Jenny Shipley
Chief Executive: Albert Brantley