NGC investors await windfall

By CHRIS DANIELS

NGC's share price is creeping up as the market looks for Vector to raise its $3-a-share takeover price.

Vector is offering NGC shareholders $3 cash for their shares, the same price it is paying Australian Gas Light (AGL) for its 66 per cent stake.

But NGC shares are now trading at $3.11 each, raising hopes for a more lucrative offer from Vector.

Interest is also focusing on the float of Vector shares.

NGC shareholders want part of the action when the Auckland lines company comes to the stock exchange next year.

To raise the money for its $1.3 billion takeover of the gas transmission company, Vector will partially privatise, offering 24.9 per cent of the company.

The rest of the powerlines and gas company will remain in the hands of the publicly elected Auckland Energy Consumer Trust.

Since the $3 a share offer was announced on October 11, NGC shares have crept up in value, reaching a high for the year of $3.12 on Tuesday.

How valuable new Vector shares will be will depend on whether it can buy up all of NGC.

If it can, shares offered in the float will be for a fully merged and more valuable company.

Vector says any public offering of its shares will happen within 12 months, but is dampening public expectations that it will be soon, saying it is likely to be towards the end of that period.

NGC shareholders will be trying to push in to an already long queue of investors wanting to be at the front of a Vector float.

Vector issued $307.2 million of bonds two years ago giving their owners a guarantee of priority treatment in any share offering.

In a float, each bondholder will be given the right to subscribe for $500 worth of ordinary shares for every 1000 capital bonds owned.

Vector chairman Michael Stiassny has also said that Vector's income beneficiaries - power users living in Auckland City, Manukau City and Papakura- are likely to get some special treatment when the shares came on offer.

The timing of the takeover should be known once Vector has gained regulatory approvals.

It has applied to the Commerce Commission and the Takeovers Panel for permission to buy NGC.

The panel has been asked for a waiver allowing Vector to buy the holding company AGL uses to own its NGC shares, rather than the shares themselves.