Sharechat Logo

Contact Energy investors hit paydirt ­ at last

Friday 28th March 2003

Text too small?
After a rough start, investors who bought into the Contact Energy float four years ago have cause to celebrate.

Those who paid the government $3.10 a share in 1999 have seen the shares climb to $4.46 this week. Adding in dividends worth 73c the average annual return has been around 14%.

Even Edison Mission Energy, the US energy conglomerate that paid $5 a share for a 40% cornerstone holding and now has 51%, must be starting to feel a bit chirpier.

It's had a rollercoaster exchange rate ride but the kiwi is back around where it when Contact was privatised. Even so Edison is nowhere near recouping the cost of the truckload of debt backing its investment.

Too bad for Edison that minority shareholders didn't take to its cleanup offers at $3.85 and then $4.14 back in 2001.

Rating agency Standard & Poor's in February affirmed Contact's investment-grade rating after new governance measures aimed at allaying market fears Edison would cash-strip the company.

The latest share price surge is in response to strong profit results, increased generation capacity following the $500 million purchase of NGC Holdings' Taranaki Combined Cycle station and climbing wholesale market power prices.

The price spike brings the possibility of a repeat of the bumper earnings Contact made during the 2001 dry winter but it's a little early yet to count the profits.

It also brings the possibility of government meddling in the market. Chief executive Steve Barratt this week warned state intervention would only delay the building of new plant.

  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Fonterra farmers urge MPs to unshackle cooperative
NZ dollar benefits as EU likely to grant Brexit extension
24th October 2019 Morning Report
OPINION: All the questions the convention centre fire asks
MARKET CLOSE: NZ stocks drop as investors dump power companies on smelter scare
NZ dollar eases after another Brexit failure
SkyCity, Fletcher won't name their insurers
NZ stocks smacked by smelter review, SkyCity fire
No govt cash for Tiwai Point - Woods
Strong dairy exports narrow Sept trade deficit

IRG See IRG research reports