Big Vector float finally sparking

The country's biggest initial public offering of new shares in six years is finally under way, with energy network company Vector unveiling details of its $593 million float.

Vector has also disclosed its takeover deal for the one-third of NGC it does not already own, saying it will pay $3.40 for each share - 78c in cash and the rest in new shares.

It should be on the stock exchange by spring, with a market capitalisation of up to $2.38 billion.

Less than one quarter of the company is being sold into private hands. The publicly elected Auckland Energy Consumer Trust will stay as owner of 75.1 per cent of the billion shares on issue.

After nearly a day of NGC shares on a trading halt, late trades yesterday sent the shares surging 22c, to close at $3.72 each.

Its shares last traded on Friday at $3.50, below a record high of $3.60 hit on Wednesday last week.

This jump to $3.72, well above the $3.40 a share takeover price, shows what value investors are placing on the Vector shares they will be partially paid in.

Last year, valuers Grant Samuel said the underlying value of NGC shares was in the $2.50 to $2.76 range.

Approval for the sell-off of 24.9 per cent of the company was given by only two of the five trustees, after John Collinge was barred by a court order from voting on the deal. Chairman Warren Kyd later used his casting vote to get the partial privatisation approved.

As owner of 75.1 per cent of Vector, the trust has signed a deal with the company. The board, which will retain final discretion around price increases, has promised to consult the trust before increasing power prices to residential and small commercial customers in its home area.

Although the pool of those getting dividends will now widen to include the new investors, Vector chairman Michael Stiassny says the amount paid out to each beneficiary will double, given the much larger size of the company.

Vector says its dividend policy will be to distribute "all funds surplus to the investment and operating requirements of the company as determined by the board".

The plan

* The float Vector is New Zealand's biggest energy network company, operating in the electricity, gas and telecommunications fields.

* The Auckland Energy Consumer Trust, which is publicly elected, owns Vector. It has decided to partially privatise the company, selling off 24.9 per cent for $593 million.

* New Vector shares will be listed and traded on the stock exchange.

* Money raised will be used to pay down debt incurred when it bought 66 per cent of NGC last year.

* With the float, Vector is launching a takeover offer to buy the rest of NGC.

* It is offering NGC shareholders $3.40 a share. It is paying them 78c in cash, the rest in new Vector shares.

The timetable

* AECT beneficiary offer: opens June 28; closes noon August 10.

* Capital bondholder offer: opens June 28; closes 5pm August 1.

* NGC takeover offer: opens July 11; closes 5pm August 10.

* Public offer: General offer opens June 28.

* Institutional offer opens no earlier than August 10.

* Public offer closes: 5 pm August 24.

* Allotment of shares: from August 25.

* Quotation on the stock exchange and first trading: August 26.