Debt load hits Powerco bottom line
New Plymouth-based electricity and gas utility Powerco has again reported no tax paid to Inland Revenue after a loss of $30 million for the year to March.
The result continues a run of losses since 2010 as the cost of huge related-party debts negates healthy operating profits.
Results filed to the Companies Office a few days ago show Powerco NZ Holdings generated revenue of $398m for the year to March and made a profit before interest and tax of $127m.
However, interest payments of $163m dragged the result into the red, producing a tax benefit for Powerco of $5.9m.
Powerco has debts totalling $1.76 billion, of which $682m is owed to parties related to its overseas owners, the Queensland Investment Corporation and Canadian-based Brookfield Infrastructure Partners.
The related-party debts had interest costs of $80m.
Powerco did not respond to a request for comment.
Powerco is in the midst of an ownership change as Brookfield seeks a buyer for its 42 per cent stake.
An Australian Financial Review report said potential investors were in New Zealand last week to examine Powerco's assets before final bids this month.
At least three bidders are believed to have been introduced to Powerco's management, including AMP Capital, Deutsche Asset Management (the former RREEF Infrastructure) and State Grid Corporation of China, and shown around its assets.
It is understood bidders were shown around Powerco's Wellington gas network and the Bay of Plenty and Taranaki electricity assets, among others.
Some are more familiar with New Zealand utilities than others.
AMP Capital is working with former Powerco chief executive Richard Krogh, who stepped down from the top job in 2011 and has since turned his hand to consulting. It also counts Brookfield staffer Michael Cummings on its bid team.
State Grid, the world's largest utilities company, appears to be keen to enter New Zealand, having taken its first steps into Australia over the past six months. Whether it will bid keenly for Powerco at a time when it is seeking to bed down a US$7.5b Singapore Power deal remains to be seen.
Macquarie Capital is thought to be tending to State Grid.
The vendor would also be interested to see what the bidders put in their draft regulatory filings, with the winning bid subject to New Zealand foreign investment approval.
Some of Powerco's assets are on defined "sensitive land", which means any "overseas person" would need consent to invest.
- Additional reporting AFR
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