TECT sells $144 million worth of shares

Tauranga Energy Consumer Trust chairman Bill Holland. File photo

The Tauranga Energy Consumer Trust has made $144m from selling a chunk of its power generation shares in a bid to diversify.

The trust sold 19.99 per cent of its 26.8 per percent holding in Tilt Renewables for $2.30 per share to Mercury New Zealand.

The price of $2.30 represented a significant premium of 24.3 per cent over the closing price of $1.85.

The trust also agreed to give Mercury an option over its remaining 6.8 per cent holding in Tilt at $2.30 per share.

If this option is exercised, the trust would receive a further $49m.

In a statement the trust said it was extremely happy with the price received, considering the stake is a non-controlling stake.

Trust chairman Bill Holland said the offer was too good to turn down.

"We have enjoyed our investment in Tilt and the value the shares represent, but given the significant premium offered, it was in the best interests of our beneficiaries to accept the offer.

"We now have the ability to invest over $140m in other opportunities, further diversifying our portfolio and hopefully increasing the cash returns for the trust and its beneficiaries."

The trust acquired a shareholding in Tilt Renewables due to the demerger of Trustpower in November 2016 where Trustpower shareholders received shares in both Tilt Renewables Limited and Trustpower.

Accordingly, the trust acquired 83,878,838 shares in Tilt Renewables Limited.

Subsequently, the trust has been reviewing its shareholding in Tilt on the basis that the trust had a high concentration of its portfolio invested in the generation sector, and that with a growth focus, the company will likely to be a low dividend paying stock with high capital calls in the near to medium term.

The sale will allow TECT to further diversify its investment portfolio, and trustees will look to reinvest the funds as part of its wider diversified portfolio.