Buller Electricity wins takeover of Pulse Energy as directors agree to sell

Thursday 31st December 2015

Three of Pulse Energy's directors have accepted Buller Electricity's share offer, giving the South Island lines company more than 90 percent of the energy retailer's shares and the ability to enforce compulsory acquisition of the remaining stock.

Pulse deputy chair Trevor Janes, whose trust Selenium Corp held 0.4 percent of the company, and director James Hoseason, who held 5.3 percent, have accepted Buller's offer for all their Pulse equity securities, while interests associated with director Peter Young also intend to accept the offer, Auckland-based Pulse said in a statement.

In November, a committee of the board's independent directors, comprising Janes, Hoseason, Young and Joseph Van Wijk, couldn't agree on what to recommend to investors. Janes, who chaired the committee, Hoseason and Young recommended investors sell their shares and options, but couldn't make a recommendation on the convertible notes, while at the same time saying none of them would take up the offer. Van Wijk said he would be selling into the takeover, and recommended investors accept unless another party trumps Buller's bid.

Today, Janes, Hoseason and Young recommended holders of mandatory convertible notes accept the offer, "as it appears inevitable that Buller will enforce compulsory acquisition."

"Accepting the offer as soon as possible will facilitate a more timely payment under the terms of the offer. Payment under the compulsory acquisition process could take some time, depending on when Buller initiates compulsory acquisition," they said.

Janes and Hoseason also own about one third of the company's convertible notes.

Buller currently holds 87.7 percent of Pulse. It announced its intention to take over Pulse in October, and made its full takeover 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 this year.

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.

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.

Hoseason will resign as a director of Pulse from Jan. 1, and Janes intends to resign by Jan. 31.

BusinessDesk.co.nz

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