Trustpower reacts to electricity review and caps bond issue
Energy company Trustpower has capped off a busy week that started with the naming of a new chief executive by declaring that no oversubscriptions to a $75 million bond issue will be accepted and expressing disappointment over some aspects of the electricity industry review.
Earlier this week, the power company revealed that Vince Hawksworth would become chief executive in April.
He will replace Keith Tempest, who will step down at the end of the year after eight years in the top job, while Chris O’Hara will serve as acting chief executive until Mr Hawksworth arrives.
Today it revealed that its five year senior bonds offer – maturing in December 2014 – had been oversubscribed, but that oversubscriptions would not be accepted and bonds would be allocated on a first come, first served basis.
TrustPower said it received applications through the public pool of more than $2.975 million, after accepting allocations from NZX participant firms and institutions of $72.025 million, putting it over the $75 million mark the issue had been limited to.
Although it initially said the issue was limited to $75 million plus any oversubscriptions it may accept, it has decided not to accept any and public pool applications would be allocated to those who got in first.
Applications for the five year bonds close next Friday and are expected to commence trading on the NZDX two days before Christmas.
Meanwhile, the closing date for a $50 million seven year bond issue has extended to January 27, with $49.4 million worth of bonds already subscribed for, including firm allocations.
Sorting out its senior bond offer comes as the company deals with the ramifications from the ministerial review of the electricity market, also announced this week.
The company said while it was pleased much of the uncertainty hanging over the industry had been relieved, it was disappointed in a number of factors.
These include the review’s ignoring of the need to significantly improve the performance of the three electricity SOE's and the omission of any requirement for SOE's to swap customers to back the required compulsory hedge contracts.
Chief executive Keith Tempest said this would result in tens of millions of dollars of sales and marketing costs being wasted while SOE's fight to retain customers in some markets, while other SOE's fight to win them.
He added TrustPower did not believe that this raft of changes will encourage innovation, demand side participation, new entrant competition, better prices and options for consumers, or a more reliable electricity supply.
"TrustPower has demonstrated over years of electricity reforms and that it is well able to adjust its strategy and operations to accommodate and capitalise on government market interventions. In accepting the inevitability of these latest changes, TrustPower is confident that it can again rise to the challenge, grasp the opportunities, and continue its long history of quality customer service, innovation, and growth."