Australia's Origin Energy has sold is Contact Energy shares to underwriters Macquarie Capital for $1.8 billion, ending months of speculation that it intended to exit.
Origin's shareholding in Contact is expected to be onsold to a broad range of Australian, New Zealand and international share market institutional investors and New Zealand retail investors.
The sale will be complete by tomorrow , Contact said.
Origin - which has in the past invested billions in Queensland liquid natural gas plants - said it would use the proceeds to reduce debt and to redeem $200 million in redeemable preference shares. The transaction has been underwritten at $4.65 a share by Macquarie, raising about $1.8 billion.
Origin said it would continue to hold upstream production and exploration interests in New Zealand.
The Australian energy giant has in the past invested heavily in liquid natural gas plants in Queensland that were about to come on stream at the same time oil prices plunged.
The future of Southland's Tiwai Point aluminium smelter - New Zealand's biggest power user - has been hanging over all the New Zealand generators because a decision to shut the smelter would affect the profitability of them all.
On Monday, the smelter's owner NZ Aluminium Smelters, said it had reached a supply agreement with Meridian Energy, thereby ensuring the smelter's short term future.
Contact, which will report its June year result on August 17, said it expects its earnings before interest, tax, depreciation, amortisation and financial instruments to be about $525 million.
The company said it expected its underlying earnings after tax to be about $161 million and for its free cash flow to come in at $363 million.
Contact said it support increased distributions to shareholders and as a result has revised its distribution policy to target an average ordinary dividend equivalent to about 100 per cent of underlying earnings after tax from 80 per cent previously.
The Contact board said it would also seek to list its shares on the ASX within four to six weeks.
"We thank Origin for their support over the last 11 years as we have reinforced Contact's position as a leading New Zealand-based energy company," the Contact board said in a statement.
"Today marks the start of an exciting new phase in Contact's history," they said.