Brisbane-based Prime yesterday agreed to sell down just over one percent of Powerco's voting securities after the Takeovers Panel said it considered the recent purchase of the Powerco's shares by a Prime subsidiary might not have complied with the code.

The panel said it considered the lock-up agreement between the New Plymouth District Council, Taranaki Electricity Trust and Powerco Wanganui to sell 53.65% of Powerco at NZ$2.15 a share, along with Prime and its adviser Babcock & Brown could make them "associates", which meant Prime could not acquire shares.

Prime Infrastructure Networks Australia had purchased just over 1% of the voting securities of Powerco through on-market trading since September 1.

The panel said Prime did not accept the lock-up agreement made it an associate of the majority shareholders but wanted to proceed with the takeover offer for Powerco at the earliest possible time and wished to “avoid the delay which could be caused by having the matter formally determined by the panel". Accordingly Prime had sold the recently acquired Powerco shares to non-associated parties.

Independent Powerco directors have appointed Grant Samuel & Associates to put together an assessment of the Prime offer. This, together with the directors' recommendations, will be posted to shareholders next month.