KEY POINTS:
A consumer trust moved yesterday to frustrate Todd Energy's $82.5 million bid for electricity generator King Country Energy.
The King Country Electric Power Trust said it was considering a $4.80-a-share bid to lift its stake from 10 per cent to 27.5 per cent.
The proposed offer - which
is subject to the approval from holders of 50 per cent of the shares on issue - is 40c more than Todd's offer.
If successful, the trust's bid will give it an effective veto over all big decisions facing the company, including Todd Energy's proposal to merge the business with neighbouring Bay of Plenty Electricity.
King Country Energy Electric Power Trust chairman Brian Gurney said: "If [the bid] succeeds it would achieve our objective of bringing stability to King Country Energy. Management, staff and customers are worried about their company disappearing.
"The trustees look forward to support of local shareholders to secure the future of King Country Energy and maximise the company's value."
King Country Energy's shares - which trade on the Unlisted platform - last changed hands at $4.80.
The shares got a boost just before the holiday after King Country Energy's independent directors disclosed they had rejected Todd Energy's bid as too low and said they had received an expression of interest from a rival party.
The independent directors' view was backed by a report from corporate advisory firm Grant Samuel, which valued King Country from $4.80 to $5.26.
Todd Energy, which owns 35.8 per cent of King Country Energy, was not available for comment.
Gurney said the offer would be subject to the trust first undertaking a review of its portfolio - made up of a 10 per cent stake in King Country Energy and a 25 per cent stake in energy distributor The Lines Company.
It would also depend on the Government giving the trust an exemption under the Electricity Industry Reform Act, which prevents companies or individuals from holding more than a 10 per cent stake in a generator if they hold more than 10 per cent in an energy distributor (and vice versa).
Gurney said the exemption would be temporary since the trust would only make the offer if the ownership review concluded a sale of its stake in The Lines Company was in its best interests.
"At the moment the regulated part of the industry is facing reduced returns and there is more opportunity in the retail generation side," Gurney said.
Meanwhile, the trust was undecided on a push by the independent directors to list King Country Energy on the NZX or the NZAX, he said.
The directors believe such a move will boost trading in King Country's shares and, as a result, the share price will more accurately reflect the company's value.
King Country's board has previously rejected a move to NZX, although its reasoning is not clear.
