Infratil buys majority of N.Z. hydro utility

Utilities investor Infratil Ltd. said October 31 it will buy the New Zealand interests of U.S.-based Alliant Energy, giving Infratil majority control of New Zealand hydropower utility Trustpower.

Infratil is to pay Alliant NZ$445 million (US$297 million) for Alliant’s 23.77 percent stake, which includes Alliant’s 5.07 percent stake in Infratil itself. Infratil also is to assume Alliant’s local net debt of about NZ$65 million (US$44.3 million).

The sale provides an exit for Alliant, which like many U.S. utilities with foreign assets has been looking to refocus on its domestic operations. An analyst said the acquisition would bolster Infratil’s balance sheet, while keeping out competitors.

Infratil, already a 35 percent owner of TrustPower, said it would move to majority ownership by keeping at least a 15 percent stake from the Alliant acquisition. It said the deal would be funded from existing debt facilities, and TrustPower’s finances will be consolidated into Infratil’s accounts.

Of those TrustPower shares Infratil decides not to keep, up to 14 million — 4.4 percent — will be offered to Tauranga Energy Consumer Trust, which already owns about 29 percent of the power company, at NZ$5.90 each (US$3.93), about an 18 percent discount to the October 31 market price. Another 4 percent will be sold on the market early next year. The Trust also has an option to buy up to 10.95 million Infratil shares — 5.05 percent — at market price.

TrustPower’s 33 hydro stations and one wind farm generate about 5 percent of New Zealand’s electricity. Infratil said the renewable energy is likely to provide strong returns as it benefits from government policy changes associated with climate change.

Wisconsin-based Alliant said it expects to realize net proceeds of US$175 million with an after-tax gain of about $1.10-$1.20 per share in the fourth quarter.

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