Carve-up on cards in NGC stake sale

By PAUL PANCKHURST

A carve-up is one of the possibilities on the cards for billion-dollar listed gas company NGC.

Indicative bids are due on Wednesday for the 66 per cent stake in the company held by AGL of Australia.

Finance industry sources say the bidders will include at least one consortium - and possibly more - whose members would split the business up.

One bidder grouping is believed to include the state-owned Genesis Power and Australian infrastructure investor Duet.

NGC's businesses include gas trading, gas transmission and distribution, gas and LPG processing, LPG trading, and metering.

Observers say the businesses could be pulled apart.

However, one issue for a consortium bid would be the uncertainty over securing 100 per cent control of the company.

A purchase of a 66 per cent stake would trigger a takeover offer to the rest of the shareholders under New Zealand's Takeovers Code.

If a takeover offer failed to secure 90 per cent of the company - the level where the rest of the shares can be compulsorily acquired - a consortium could be stuck, lacking the power to effect a break-up.

Corporate dealmakers expect the publicly owned Auckland lines giant Vector to be among the bidders to line up on Wednesday.

That is against the background of the infighting within the company's owner, the Auckland Energy Consumer Trust, and the controversy over the possibility of a share float to raise money.

A well-informed source told the Business Herald that Vector's management would be comfortable in the short-term with a lower level of control of NGC than 100 per cent.

Before AGL's decision to put its stake on the block, NGC had been in merger discussions with Vector.

AGL managing director Greg Martin said in August that his company wanted to use the proceeds of the sale of the NGC stake to buy or build power plants in Australia, expand in electricity retailing in New South Wales and invest in renewable energy generation.

"There are a range of areas where we see we can reapply those proceeds for greater returns to AGL shareholders."

NGC has a market capitalisation - the total value of the shares on issue - of $1.37 billion.

The ownership shake-up at the company is part of a torrent of change rushing through the energy sector.

Prime Infrastructure, of Australia, is in the midst of a vexed takeover bid for Powerco.