Origin exits Contact for $1.8B, ending foreign control era 4 Aug 2015
Related articles
- NZ consumers grow more upbeat, may resume spending Business
- Knowles quits as CEO of KiwiBank Business
- NZ migration bolstered by British invasion Migration
- NZ manufacturing activity reaches highest since 04 Business
- NZ dollar hits 22-month high vs euro Business
- OceanaGold finds new gold deposits at Fraser mine Business
- Transpower gets go-ahead for $170m SI upgrade Business
- NZ home sales creep up in March, still subdued Property
- NZ economy expands at fastest pace in two years Business
- New Zealand food prices fall in February Business
Origin Energy exits Contact for $1.8B; foreign control era ends
By Pattrick Smellie
Aug. 4 (BusinessDesk) - Contact Energy will become an independently governed company for the first time since privatisation in 1999 after cornerstone shareholder Origin Energy agreed to sell its 53.1 percent stake to "a broad range of Australian, New Zealand and international equity market" investors.
The sale will be concluded over the next day at a fixed price of $4.65 a share to realise $1.8 billion. The shares closed yesterday at $5.02. The move will shore up Origin's balance sheet and preserve investment grade credit ratings for the company, which is under pressure because of cost over-runs and slumping gas prices affecting its A$25 billion liquefied natural gas project in Queensland. Origin will retain its upstream interests, primarily a 50 percent interest in the Kupe offshore Taranaki oil and gas field.
The transactions end Contact's 16 years under the effective control of a foreign-owned majority shareholder following the original sale of a 40 percent shareholding to Edison Mission Energy of California in 1999, in the first partial privatisation of a state-owned electricity company. Contact will also seek a dual-listing on the Australian Stock Exchange, which it abandoned in the mid-2000s.
Origin bought EME's stake, which had risen to 50 percent, in 2003 and made an abortive attempt to merge the two companies in 2006 - a move fiercely resisted by New Zealand shareholders who saw it as a takeover by stealth. EME also attempted a full takeover in 2001, which also failed.
The company's controversial deputy chair, Phil Pryke, will resume interim chairmanship of the company he has been involved with since corporatisation in the mid-1990s. Pryke was chair under EME but was replaced by Origin managing director Grant King in 2003. Former Origin-appointed director Bruce Beeren will remain on the Contact board, along with New Zealand-based independent directors Sue Sheldon and Whaimutu Dewes.
The move sees King, one of his long-serving lieutenants Karen Moses and Contact's chief executive of the mid-2000s, David Baldwin, leave the Contact board.
The current chief executive, Dennis Barnes, an Origin secondment, will stay on as a permanent employee of Contact, the company said in a statement issued to the NZX this morning.
Contact shares were placed in a trading halt this morning while the sale is undertaken, with the expectation it will be completed by tomorrow.
The company also issued earnings guidance, saying it expects earnings before interest, tax, depreciation, interest, amortisation and movements in the value of financial instruments to be approximately $525 million and underlying earnings after tax to come in at around $161 million for the year to June 30. Its profit results will be released on Aug. 17. It will also raise its distribution policy to target dividends at 100 percent of underlying earnings rather than 80 percent at present, and will make additional distributions in the event that free cash flows exceed ordinary dividends.
Origin took out a large lump of capital prior to today's announcement, with the payment of a special dividend of 50 cents per share in late June after the Origin-dominated board decided against Contact pursuing international geothermal energy developments with cash it expects to stack up over coming years as weak electricity demand growth ends any medium term pressure to invest in new electricity generation capacity.
The ASX dual-listing is expected to be completed within four to six weeks and a search for new directors is under way, with formal elections scheduled at the annual meeting later this year.
In a statement to the ASX, King said the move was "consistent with Origin's stated intention to continue to take action to reduce operating and capital costs, realign debt across group entities and, where appropriate, divest assets. The proceeds from the sale will provide increased financial flexibility in the short to medium term."
Origin expects credit rating agency Moody's Investors Service to lower its credit rating from Baa2 with a negative outlook to a Baa3 rating with a "stable" outlook, "reflecting their view of a reduction in earnings diversity," said King. Origin's rating from Standard & Poor's will remain unchanged at BBB-minus (stable).
(BusinessDesk)
News
Hilary Timmins' Award-Winning UK Documentary Series To Inspire NZ Students
29 Jun 2020 Education
Dream Catchers, produced and directed by Hilary Timmins, celebrates the success stories of more than thirty inspirational New... more
New Zealand reaffirms support for Flight MH17 judicial process
7 Mar 2020 News
Ahead of the start of the criminal trial in the Netherlands on 9 March, Foreign Minister Winston Peters has reaffirmed the need to... more
Business
NZ Government's Economic package to fight COVID-19
17 Mar 2020 Business News
The Coalition Government has launched the most significant peace-time economic plan in modern New Zealand history to cushion the... more
NZ Government announces aviation relief package
19 Mar 2020 Business News
Transport Minister Phil Twyford today outlined the first tranche of the $600 million aviation sector relief package announced earlier... more
Living
Diversity was Key at New Zealand Trade Tasting in London
6 Jun 2022 Food & Wine
New Zealand Winegrowers Annual Trade Tasting was recently held in London, on Wednesday 4 May, in Lindley Hall.
It was the first... more
Kiwi author stuns Behind the Butterfly Gate
12 Jan 2022 Arts
Hidden behind the Butterfly Gate is where the secret has been kept for 76 years...
New Zealand writer Merryn Corcoran’s... more
Property
Fairer rules for tenants and landlords
17 Nov 2019 Property
17 NOVEMBER 2019
The Government has delivered on its promise to the over one million New Zealanders who now rent to make it fairer... more
New Zealand Government will not implement a Capital Gains Tax
17 Apr 2019 Property
The Coalition Government will not proceed with the Tax Working Group’s recommendation for a capital gains tax, Jacinda Ardern... more
Migration
Boosting border security with electronic travel authority – now over 500,000 issued
19 Nov 2019 Migration
19 NOVEMBER 2019
We’ve improved border security with the NZeTA, New Zealand Electronic Travel Authority, which helps us to... more
Christchurch reinstated as refugee settlement location
18 Aug 2018 Migration
18 AUGUST 2018
HON IAIN LEES-GALLOWAY
The announcement that Christchurch can once again be a settlement location for refugees... more
Travel
Gallipoli Anzac Day services cancelled
19 Mar 2020 Travel & Tourism
The New Zealand and Australian Governments have announced this year’s joint Anzac Day services at Gallipoli will be cancelled... more
New Zealanders advised not to travel overseas
19 Mar 2020 Travel & Tourism
New Zealanders advised not to travel overseas
more
Sport
The Skipper's Diary: Sir Richard Hadlee honouring his father and NZ's Forty-Niners
27 Oct 2019 Cricket
NZNewsUK London Editor Charlotte Everett spoke to Sir Richard Hadlee about why he’s chosen to publish his father’s... more
PREVIEW: All Blacks v England semi-final
26 Oct 2019 Rugby
The two most convincing quarterfinals winners are set to square off in a semifinal showdown for the ages when the All Blacks meet old... more
Columns
Gordon Campbell on the Gareth Morgan crusade
11 Nov 2016 Opinion
Gordon Campbell on the Gareth Morgan crusade
First published on Werewolf
The ghastly likes of Marine Le Pen in France and Geert ... more
Gordon Campbell on the US election outcome
10 Nov 2016 Opinion
Column - Gordon Campbell
Gordon Campbell on the US election outcome
Well um.. on the bright side, there (probably)... more
Kiwi Success
Congratulations to Loder Cup winner
26 Sep 2018 People
25 SEPTEMBER 2018
The Loder Cup, one of New Zealand’s oldest conservation awards, has been awarded to Robert McGowan for 2018... more
Appointments to New Zealand National Commission for UNESCO
16 Aug 2018 Appointments
16 AUGUST 2018Appointments to New Zealand National Commission for UNESCO
HON JENNY SALESA
Associate Education Minister Jenny Salesa is... more
Recruitment
Historic pay equity settlement for education support workers
14 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more
Historic pay equity settlement for education support workers
22 Aug 2018 Recruitment
14 AUGUST 2018Historic pay equity settlement for education support workers
RT HON JACINDA ARDERN
HON CHRIS HIPKINS
Prime Minister
The... more