TrustPower share offer could be in breach of code, warns panel

By CHRIS DANIELS energy writer

TrustPower's share buyback scheme has been put on ice by the Takeovers Panel, which says it may breach the Takeovers Code.

Shareholders who have already accepted the company's two for seven, $3.70 a share buyback offer can now withdraw their acceptances.

The Tauranga-based electricity generator and retailer has a finely balanced register of shareholders, with listed infrastructure investor Infratil owning 27.9 per cent, the Tauranga Electricity Consumer Trust owning 22.7 per cent, Australian Gas Light (AGL) owning 20.5 per cent and US energy company Alliant owning 18.9 per cent.

The rest of the shares, 10.1 per cent, are owned by the public.

Analysts see the TrustPower buyback as a way of letting AGL get out of its TrustPower stake, which it so far has been unable to sell.

Broker ABN Amro has advised shareholders not to accept the offer, saying it values the shares, currently trading on the Stock Exchange at $4.10, too cheaply.

While the Tauranga Energy Consumer Trust has not decided to take part in the buyback, it is extremely unlikely to take part. It has never sold TrustPower shares before, and to take part would first have to go through a lengthy consultation process with its members.

Infratil and Alliant have agreed to keep their current stakes in TrustPower after the buyback. But if AGL decided to sell its 10 per cent their shareholdings would increase.

It is this kind of increase in shareholding that has worried the Takeovers Panel.

"The panel is not satisfied that shareholders who intend to increase their voting control in TrustPower as a result of the buyback intend to do so in compliance with the code," it said on Thursday.

It would be inappropriate, it said, for TrustPower to call a meeting to put resolutions to shareholders for approval when the company has not followed the procedure required to get an exemption.

The panel said the buyback offer did not comply with the exemption provisions because it was made, and was going to close, without all shareholders being able to consider an independent adviser's report on the merits of the buyback, or having any information about the likely changes in the control positions of the major shareholders in TrustPower.

It has issued a restraining order for 21 days.

To enable the offer to continue when the restraining order finished, the panel has "invited TrustPower and the major shareholders" to apply for a specific exemption with terms which would address its concerns.

Shareholders can be exempt from provisions of the takeovers code if the increase in their shareholding is as a result of a share company share buyback and if it is approved by a special shareholders' meeting.