King Country power trust holds on to its shares

Vince Hawksworth

The King Country Electric Power Trust (KCEPT), owner of 19.8 per cent of small-scale hydro generator and retailer King Country Energy (KCE), has confirmed it will not be accepting Trustpower's offer for its stake.

Bay of Plenty-based Trustpower announced a full takeover bid for KCE last month, after entering into a lock-up arrangement with Todd Corp's Nova Energy for 54 per cent of the central North Island utility.

The energy trust had been expected by the market not to accept the offer.

Trustpower, majority owned by Infratil, will pay $5 a share in cash in a full takeover provided it gets at least 70.2 per cent of the company, excluding the KCEPT shareholding, or a lower price of $4.78 a share if it falls short of its target.

Trustpower chief executive Vince Hawksworth said the rejection was "totally expected" and had been factored into the structure of its offer.

KCEPT said it saw its shareholding as "a cornerstone investment at this time" and therefore would not be accepting the Trustpower offer.

"We do, however, regard Trustpower as an excellent future partner in KCE and look forward to working with them."

KCE owns and operates four small hydro generation stations in the King Country and the Mangahao hydro-generation station near Palmerston North.

Together, these stations have a combined installed capacity of 53.7MW and produce on average 191GWh per annum.

KCE also has about 17,500 electricity customer connections with close to 70 per cent located in its local network.

KCE trades on the "unlisted platform" and the utility has about 6000 small shareholders.

Nova Energy has already said it will accept the offer for its holding. Todd was reported to have been interested in making its own full takeover for KCE, but could see no way of buying out the trust.

NZX-listed Trustpower is 51.5 per cent owned by Infratil, and has Tauranga Energy Consumer Trust as a cornerstone investor, with a 26.8 per cent stake.

"We are used to working with a strong cornerstone shareholder," Mr Hawksworth said.

Trustpower would wait to see how the shareholder acceptance process played out, then sit down with KCE and discuss how to get the best out of the company for its shareholders.