BBI babcock & brown infrastructure group

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    heres the issue to do with tarrif charge proposed by the regWellington, Feb 24 NZPA - The sale of a half-stake in New Zealand electricity and gas distributor, Powerco NZ Ltd, has been interrupted.

    Powerco is the nation's second largest electricity and gas distribution business with more than 400,000 customers across 39,000sq km in the North Island.

    On November 4 last year, Babcock and Brown Infrastructure (BBI) said it was selling a 50 percent stake in Powerco to Queensland Investment Corporation (QIC).

    But today BBI - an offshoot of Babcock and Brown - told the ASX: "Issues have arisen which have created uncertainty relating to completion of the sale of an interest in the New Zealand business of Powerco.

    "BBI is working to resolve the issues but is not yet in a position to provide details of any outcomes".

    A conclusion is expected by 10am on Thursday, it said. In the meantime, its shares are on a trading halt.

    The deal when announced was a 25 percent premium over the original 2004 acquisition price of $1.8b for Powerco, BBI said. It expected net proceeds from the sale in the order of $400 million, which would be used for debt repayment.

    Share prices for BBI have slumped 95 percent over the past year and it has lined up asset sales to reduce its debt, including WestNet Rail and BBI Euroports.

    The deal announced on this side of the Tasman put an enterprise value of $2.05 billion on the New Zealand business.

    BBI has previously said that at the close of the deal, its own managers and the funds managed by QIC would share control of the asset.

    QIC head of global infrastructure Ross Israel said late last year Powerco was a strategic regulated utility.

    "We expect it to provide stable long-term returns," he said.

    The sale was conditional on gaining required consents, including from the Overseas Investment Office, lender consents and other consents relating to the transfer of Powerco Tasmania, where BBI wants to retain a gas distribution business with a book enterprise value of $200 million.

    On February 9, an international agency, Fitch Ratings, said a decision by the Commerce Commission in October last year - before the deal was announced - to impose authorisation on gas distribution prices charged by Powerco was unfavourable and would restrict cashflows.

    ulator
 
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