Friday 16th March 2012
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Todd Energy has sold its half-interest in the 38 Megawatt hydro-electric power station on the Mangahao River to its other shareholder, King Country Energy, in a cash and shares deal that makes Todd the 54.1 percent owner of the regional generator-retailer.
The power station, on a major tributary of the Manawatu River, has been in operation since 1924.Todd bought the business in a joint venture in 1997 with and KCE, whose shares trade on the Unlisted platform.
KCE will fund the purchase with a payment of $33.76 million cash and the issue of 7.63 million new KCE shares to Todd, at $4.75 a share, raising Todd’s ownership of KCE from 35.4 percent at present.
The other major KCE owner, King Country Energy Trust, will dilute its holding from 20 percent to 14.2 percent as a result.
KCE is also a local monopoly electricity network owner, and the purchase would allow it to increase its customer base, said chief executive Rob Foster. Customer growth has been constrained because of KCE’s limited access to additional generation output and an aversion to wholesale electricity spot market exposure.
“We only generate 125 Gigawatt hours annually, well short of our current customer demand of 210GWh,” said Foster.
Mangahao produces an average annual output of 132GWh.
“This government clearly puts King Country Energy on a path for expansion and we’re forecasting solid earnings growth once the transaction is finalised,” he said. The transaction would also allow balance sheet restructuring and increase free cash flow per share.
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