Buller may make full takeover bid for Pulse

Thursday 10th September 2015

Lines company Buller Electricity may make a full cash takeover for the 44 percent of small-scale electricity retailer Pulse Electricity that it doesn't already own in partnership with an undisclosed third party.

Pulse, which has been in a trading halt since Tuesday, has formed a committee of independent directors, chaired by Trevor Janes, to consider the potential transaction, it said in a statement. The Auckland-based electricity retailer said a price was not known, but it is understood Buller will offer a premium to the current share price of 6 cents. The shares trade on the New Zealand Alternative Index, and under the offer, Buller would acquire all mandatory convertible notes and employee share options on issue.

"Pulse understands that a number of steps preparatory to BEL giving takeover notice would need to be completed," it said in a statement. "At this time it is unclear precisely when a takeover notice will be given to Pulse. It is also possible that no takeover notice will be given or no offer will be made."

Pulse ceded a controlling stake to Buller Electricity in 2011 to repay debt and provide capital for expansion after the minnow retailer ran out of cash and leaned on the shareholder to get it through. Buller Electricity is the local lines network company on the West Coast of the South Island. It reported an annual profit of $328,000 in the year to March 31, on operating revenue of $110 million, according to its 2015 annual report.

In June, Pulse reported a $2.9 million loss in the year ended March 31, from $2.8 million the year before. During the year, it received $13.9 million in shareholder loans while repaying loans from shareholders of $14.4 million and issued $4.8 million of convertible notes at the same time as entering into new banking arrangements with Bank of New Zealand and dropping Westpac Banking Corp, which had required a parent guarantee. Borrowing costs were expected to be lower with BNZ, it said.

The result included a 27 percent increase in revenue to $101.8 million, compared with $74.1 million the previous year and customer numbers grew by 7,317 to 54,761.

The company, started in 2004, is one of 24 on the NZAX market which will be eventually be closed in favour of the new NXT market.

BusinessDesk.co.nz

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