Powerco underwriters meet $18.5m shortfall

By CHRIS DANIELS energy writer

Powerco has revealed details of a disappointing equity-raising mission, which left underwriters Macquarie Equities having to make up an $18.5 million shortfall.

The New Plymouth-based gas and electricity distribution company began the capital-raising programme to pay for former UnitedNetworks assets in the central North Island.

But the company fell more than 12 per cent, or $18.5 million, short in the second part of its so-called "jumbo" equity raising, where it sought to get $48 million from retail investors.

Powerco chief executive Steve Boulton said underwriters Macquarie Equities had since told the company that nearly all of these shares had now been placed with other investors.

The underwriters were left with 1.6 million shares, which is half of 1 per cent of the company.

Powerco raised $102 million from institutions in October, selling the shares at $1.60 each.

Despite the shortfall in investor support for the offer, Boulton said the company was "pleased with the strong investor support", given the size of the offer and the soft equity market conditions.

Buying the UnitedNetworks assets had made Powerco New Zealand's largest gas distribution company and second-largest electricity company in terms of consumer connections, about 390,000 in total.

Powerco is paying $810 million for the UnitedNetworks assets. That price does not including transaction and integration costs.

Boulton said the integration with UnitedNetworks' assets was going according to plan and should be finished by January 31.

Powerco shares closed yesterday at $1.56 each, down 2c.