Powerco to repay $100m subordinated bonds

Gas and electricity distributor Powerco is to repay $100 million of subordinated bonds which mature next month, with its two shareholders injecting new equity into the business.

Powerco has networks in the upper central, central and lower North Island, with around 100,000 gas customer connections, and around 315,000 electricity customer connections.

It is 58% owned by funds associated with Australian institutional investment manager QIC, and 42% owned by Prime Infrastructure Holdings.

Powerco said today the equity injection was to be partially funded through a subordinated loan from its ultimate shareholders to Powerco NZ Holdings, Powerco's immediate holding company.

Powerco NZ Holdings would then apply the proceeds of the subordinated loan, together with its own funds from Powerco dividends to subscribe $100m of new equity in Powerco.

Powerco chairman Rick Bettle said the equity injection was a further step in strengthening the balance sheet of the business.

That would position Powerco well for its future refinancing activities, ongoing investment in its networks, and related growth opportunities.

Powerco had obtained approval from the NZX to cancel the quotation of the subordinated bonds from April 16, with trading to be suspended from market close on March 29.