Aquila sells New Zealand power unit


Auckland-based Vector Ltd will buy Aquila's UnitedNetworks for NZ$1.5 billion

Geoff Hiscock
CNN Asia Business Editor

AUCKLAND, New Zealand (CNN) -- U.S. gas and electricity distributor Aquila Inc is continuing its selldown in Australasia, with the sale Tuesday of its New Zealand unit UnitedNetworks Ltd.

Auckland-based Vector Ltd is offering NZ$9.90 a share for the company, valuing its bid at NZ$1.5 billion ($706 million).

Vector is owned by the Auckland Energy Consumer Trust, made up of local councils and community trusts.

Aquila, which owns 70 percent of UnitedNetworks stock, said it would accept the Vector offer.

As a requirement of the bid, UnitedNetworks has agreed to sell its eastern region electricity network to a consortium of Powerco (another North Island utility) and Hawke's Bay Network for NZ$785 million.

Powerco will also buy its central North Island gas pipeline network for NZ$220 million.

Gas and electricity networks

UnitedNetworks is New Zealand's 10th largest company by market capitalization and distributes electricity to about 30 percent of the country's consumers and natural gas to about half the market.

It also owns and manages broadband optical fiber networks in the two major cities, Auckland and Wellington.

Shares in UnitedNetworks closed 2.6 percent higher at NZ$9.75 Tuesday.

Aquila said in June that it wanted to sell its New Zealand unit as part of efforts to strengthen its balance sheet and lift its credit rating.

In July, its 34 percent-owned Australian unit United Energy sold assets worth Aust.$880 million (about $494 million) to the Australian Gas Light Co (AGL).Full story

Aquila, which managed United Energy, said at the time that the sale of its Pulse, EdgeCap and Utili-Mode businesses to AGL would allow United Energy to focus on its core electricity network operations. The three businesses it sold were in electricity retailing, natural gas marketing and utility back-office activities.

Reducing debt

In a statement released in Kansas City late Monday, Aquila chief executive officer Robert K. Green said the New Zealand sale would raise $302.6 million of net cash, which would be used to reduce debt.

"To date, we have signed purchase and asset sales agreements totalling $786 million toward our $1 billion target," he said.

Earlier in the quarter, Aquila cut its New Zealand-related debt by $60.3 million as part of a refinancing.

In a statement Tuesday to the New Zealand Stock Exchange, UnitedNetworks chairman Keith Stamm said he was confident the deal with Vector would be completed quickly, subject to the statutory notice and waiting period under New Zealand law.