Contact's shares come out of steep slide

By CHRIS DANIELS energy writer

Contact Energy's share price stabilised yesterday after a steep decline since January 27 prompted by speculation about Edison Mission's prospects for selling its 51 per cent stake in the company.

The shares closed up a cent at $5.11.

The United States energy giant is trying to sell billions of dollars of assets around the globe to ease debt problems it faces at home.

Through its merchant banking advisers, Edison is in the early stages of marketing all the different assets to potential buyers.

It has said it wants to sell its global assets as a whole or in regional chunks.

A trade sale would probably gain the most return for Edison, but if attempts to get buyers for large chunks of its portfolio fail, there is speculation that the company might consider a "placement", or sale of the 51 per cent Contact stake to local or regional institutional and retail investors.

It apparently is not prepared to accept bids for "single assets", though it is not clear whether the Contact stake counts as a single asset.

Edison spokesman Kevin Kelley said the company would not be making "any comment on any aspect of potential sale of assets".

One potential buyer of the Contact stake is Australian energy company AGL, former owner of 20 per cent of Trustpower and current owner of 66 per cent of NGC.

AGL was terribly burned by its first foray into electricity generation and retail when it owned TransAlta.

Its management has recently said it is looking for new power generation opportunities and, since selling its Trustpower stake last year, could re-enter power generation in New Zealand through a Contact purchase.

AMP Henderson Global Investors NZ portfolio manager Nat Vallabh said Edison's $1.5 billion Contact stake was a lot to absorb.

Even one-third of the stake being bought by New Zealand institutions would be a "very good outcome", he said.