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Buller Electricity initiates mop-up provisions for holdout shares in Pulse Energy

Tuesday 12th January 2016

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Buller Electricity has sent a compulsory acquisition notice for the remaining shares in Pulse Energy, after becoming the dominant shareholder in the energy retailer following a takeover bid.

The South Island lines company became the holder of 90 percent or more of the voting rights in Pulse on Jan. 8, making it the dominant shareholder, it said in a statement to the market. All outstanding shareholders must now sell their shares to Buller. 

At 4pm yesterday, Buller announced it now holds 353 million ordinary shares, or 92.1 percent, in Pulse, from 317 million, or 94.6 percent, at its last disclosure on Jan. 7. On Jan. 8, the company issued 35 million ordinary shares on conversion of its mandatory convertible notes, diluting Buller's holding. 

Shareholders have until Feb. 2 to return a signed transfer form, and will be paid out, at 11 cents per share, within seven days.

Buller announced its intention to take over Pulse in October, and made its full offer on Nov. 16, offering 11 cents per share, 5 cents per option and $1.10 for each mandatory convertible note. Pulse's NZAX-listed shares last traded at 10.5 cents, and have gained 50 percent in the past year.

On Dec. 31, three of Pulse Energy's directors accepted the share offer, giving the lines company more than 90 percent of the shares and the ability to enforce compulsory acquisition of the remaining stock.

Pulse ceded a controlling stake to Buller 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.

The independent adviser's report by Campbell Macpherson valued the shares at between 9.2 cents and 11.3 cents, the options at a maximum of 2.8 cents, and the notes at $1.11 to $1.15. The report said all three prices offered fell within its valuation ranges, but said investors would need to make up their own mind on whether to accept the offer.

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