Genesis share price range set

Bill English
Bill English
The Government says shares in state-owned power generator and retailer Genesis Energy will be priced in a $1.35 to $1.65 range and will include a one for 15 loyalty bonus share offer as a sweetener for New Zealand investors.

The proportion of shares to be sold would be announced on March 26, Finance Minister Bill English said. The Government has previously said it will sell between 30 and 49 per cent of Genesis Energy.

Based the indicative price range, prospective 2015 financial year implied gross dividend yield was forecast to range from 13.5 per cent to 16.5 per cent. Genesis is expected to list on the NZX on April 17.

The bookbuild will take place on March 27 and March 28 and the final price will be announced on the night of March 28.

English said that to encourage New Zealand investor participation, New Zealanders who bought shares and who held them for 12 months would be eligible for one loyalty bonus share for every 15 shares held, with a cap of 2000 bonus shares.

"The process will allow the Crown to determine the expected demand from the various investor pools, at which point we will decide and announce the level of sell-down for the bookbuild process," State Owned Enterprises Minister Tony Ryall said in a statement.

The loyalty bonus share issue is more generous than the one employed for last year's float of Mighty River Powe, which involved a two-year wait for bonus shares, issued at a ratio of one-for-25. The Meridian offer involved instalment receipts.

Chairman Jenny Shipley, asked at a news conference about her ability to serve the company after her previous involvement as chairman of failed company, Mainzeal, said she continued to enjoy the support of government ministers.

"I am very proud to be chairman and continue to enjoy the support of the ministers," Shipley said, adding she intended to continue in the role.

Chief executive Albert Brantley said he believed investors would be "pleasantly surprised" on closer examinatoin of Genesis Energy, which has been variously described as being the "runt of litter", or the "ugly duckling", of the state's power generators.

He said the company was a truly diversified business, capable of coping with a range of wholesale electricity market conditions.

In addition, it had the largest customer base of any of the so called generator/retailers.

The company's investment statement forecast a net profit of $41.8 million for the year to June 2014, more than doubling to $95.4 million in the June 2015 year.

The difference reflected a number of one off charges taken in the current year, combined with weak wholesale powers prices brought on by unusually high rainfall over 2013.

The documents cited uncertainty over the future of the Tiwai Point aluminium smelter as a risk, and the Labour-Green plan to re-regulate the power market, as being possible future risks to its profitability.

Genesis has the Huntly thermal gas and coal power station, the Tongariro power scheme, Waikaremoana power scheme, and Takapo dams A and B.

It also has a 31 per cent stake in the Kupe oil and gas field.

- by Jamie Gray, APNZ

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