Meridian Energy says it will pay its government shareholder a special dividend of NZ$520.9 million after selling two Tekapo power stations to fellow state owned enterprise Genesis Energy for NZ$820.9 million.
The sale of the Tekapo hydro power stations will take effect on June 1 this year and was ordered by the government as part of its attempts to make the electricity market more competitive.
“Following detailed analysis of Meridian’s future funding requirements the Board approved the special dividend to our Shareholder of NZ$520,996,030," said Meridian chief executive Tim Lusk in a statement.
The Tekapo A and B power stations, being sold to Meridian, are on the Waitaki Power Scheme. They comprise the 25MW Tekapo A power station, the 160MW Tekapo B power station and the Tekapo canal linking the two stations.
In December 2009 the government announced decisions from a Ministerial Review designed to improve retail competition in the electricity market, promote the reliability of electricity supply and improve governance in the sector through the establishment of regulator the Electricity Authority, which succeeded the Electricity Commissionlast November.
In preparation for taking ownership of the Tekapo stations Genesis says it has signed up more than 20,000 South Island electricity and LPG customers in Christchurch, Dunedin and Queenstown since February 2010.
Genesis plans to fund the purchase, through a mixture of NZ$275 million raised through an issue of equity "junk" bonds, senior bank debt, and existing cash. The NZ$821 million acquisition price is considerably higher than Meridian's NZ$643.9 million book value for the two power stations.