King Country Electric Power Trust rejects Trustpower takeover

Monday 7th December 2015

The King Country Electric Power Trust, owner of 19.98 percent of the small scale electricity generator and retailer, King Country Energy, has confirmed that it will not be accepting the takeover offer by Trustpower for its stake.

"We see our shareholding as a cornerstone investment at this time and therefore KCEPT will not be accepting the offer," a statement from the trust said. "We do, however, regard Trustpower as an excellent future partner in KCE and look forward to working with them in the future.”

The energy trust had been widely expected not to accept the offer, which is pitched at between $4.78 and $5 per share, depending on the level of uptake of the Trustpower offer from shareholders other than KCEPT.

KCE's two independent directors, including chair Toby Stevenson, recommended against the takeover because of its two-tier price structure, saying the offer price should be $5. The lower price applies for acceptances between 50.1 percent and 70.2 percent of KCE shares, excluding the KCEPT shareholding. However, there was no more premium control at 70.3 percent than at 50.1 percent, the independent directors said.

Nova Energy, a subsidiary of Todd Energy, has already said it will accept the offer for its 54.07 percent holding. About 6,000 small shareholders have KCE shares, which trade lightly on the Unlisted platform.

The Todd offshoot is understood to have wanted to make its own full takeover for KCE, which has 17,000 retail customers and several small hydro-electric generation plants, but that it was unable to see a way to buy out the local community trust. Close observers suggest Trustpower will ultimately want full control and that its listed company status may make it easier to structure an offer that is attractive to the trust.

BusinessDesk.co.nz

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