Origin considering sale of stake in Contact Energy, NZ
A sell-down is a possibility but there are some caveats due to Origin's controlling stake.
Interesting news from down under, where “the future of Origin Energy’s $1.9 billion majority stake in New Zealand utility Contact Energy is up in the air after chief executive Grant King declared it is no longer so important to underpin the company’s credit rating.” according to The Canberra Times.
The sale could have a major impact, not in NZ but also in Australia. The sale of such a large stake is something that several investment banks have been pondering but there are no actual sale operations being discussed openly. Origin is in need of liquidity to fund current and future projects, and selling a part of its assets could be a solution yet, The Canberra Times states that “complicating any sell-down is the fact that Origin’s stake is a controlling one, meaning that a quick exit through a block trade, the way that Chevron sold out of Caltex Australia, is not an option”.
According to the same source, the most viable scenario here is a sell-down where Contact would be “dual listed in Australia, where fund managers are already familiar with the company through Origin. A dual listing, as is used by the 49 per cent privatised New Zealand utilities, Mighty River Power, Meridian Energy and Genesis Energy”
To read further on the topic, follow the link.
Source: The Canberra Times