Prime keeps Powerco cash cap in place

Prime Infrastructure last night dispatched its official takeover offer for Powerco - with its maximum NZ$425 million cash cap unchanged, reducing by only NZ$50 million for priority cash recipients entitled to receive all cash for their shares.

Prime Infrastructure Networks (New Zealand) told the New Zealand Exchange of the dispatch after the kiwi stock exchange had closed yesterday, saying the revised offer provided for additional funding where there was a high level of acceptance by those recipients who were only eligible for cash consideration.

The initial proposed offer provided for a maximum cash cap of NZ$425 million, subject to scaling. However, as a consequence of revisions, the maximum cash cap remained but could now only be reduced by NZ$50 million for payments to the priority recipients, said Prime Infrastructure Management managing director Chris Chapman.

“This is clearly a terrific outcome for anyone who was contemplating accepting the cash option or combination option under the offer, although the potential still exists for scaling to apply.”

While multiple scaling permutations were still possible, the revision reduced the scaling that would otherwise have applied for New Zealand-based shareholders, especially at high levels of acceptances by the priority recipients.

Chapman said shareholders contemplating accepting the combination option would get the full 62.5% cash available (and 37.5% in Prime’s unsecured Sparcs securities) if priority cash recipients exceeded NZ$80 million.

Similarly, those shareholders contemplating accepting the cash option would get 100% cash if those priority cash recipients exceeded NZ$168.2 million. In both cases, if the cash payable to priority cash recipients was less than these amounts, it would give rise to scaling, Chapman added.

A spokesperson for public relations company Raynish & Partners told EnergyReview.Net that Prime had decided to “turn the whole thing on its head”, primarily because of kiwi shareholders’ frustration at the Takeover Panel’s exemption allowing overseas shareholders to claim 100% cash. “Essentially, the more shares that go offshore the better.”

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