On energy sells South Island clients

By Phil Boeyen, ShareChat Business News Editor

Friday 29th June 2001

Natural Gas Corporation (NZSE: NCH) has confirmed it is selling its South Island electricity retail customers to state-owned Meridian Energy.

NGC managing director, John Barton, says the agreement is subject to a number of usual conditions, including the completion by Meridian of due diligence and the finalisation of arrangements for NGC to provide transitional call centre, billing and credit services for customers.

The final value of the sale has not yet been worked out, and depends on a number of adjustments to be made in the period to October.

The divestment should be completed by the second week in July, but will be backdated to earlier in June.

"The agreement provides for Meridian to have effective ownership of On energy's South Island residential and business customers from 11 June 2001," says Mr Barton.

"Nearly all of these customers are located in Christchurch, although there is a small number in Dunedin."

The sale of South Island customers is part of a move by Natural Gas to reduce its exposure to high wholesale electricity prices, which have badly hurt the company's bottom line.

NGC is also looking at other measures to reduce its exposure and says it is discussing options with a number of parties.

The company wants to reduce its exposure to the wholesale electricity to less than 20% of its forecast demand.

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