Origin Energy has confirmed it is selling its 53 percent stake in Contact Energy.
Photo: RNZ / Diego Opatowski
Australian company Origin Energy said it was selling its entire 53 percent controlling stake in the country's second largest electricity generator.
Trading in Contact's shares has been halted, and is not expected to resume until tomorrow when the sale process has been completed.
The sale of Origin's shares has been fully underwritten at a fixed price of $4.65 a share, which means Origin will make $1.8 billion from the sale.
It said it will use the proceeds to reduce debt and redeem $200 million worth of preference shares, which will be issued when the sale is completed.
Contact Energy says Origin's three representatives on the board will be stepping down and Phil Pryke will assume the role of interim director, supported by the remaining three directors.
Contact will also seek a listing on the Australian Stock Exchange (ASX).
The company says it expects the shares to be bought by a broad range of institutional and retail investors in both New Zealand and Australia.
Its shares closed yesterday at $5.02. The company says its gross profit for the 12 months to the end of June will be down more than 10.5 percent to $525 million , while underling profit will be down 29 percent to $161 million.
Contact Energy, meanwhile, says it plans to to increase its payments to its shareholders and will seek several changes to its board of directors.
Origin bought into Contact in 2004, mainly from an Americian company, Edison Mission Energy.
Edison had become a cornerstone shareholder when Contact was privatised in 1999.
Contact had been carved out of the old state trader ECNZ three years before that.
It soon became New Zealand's second biggest electricity generator after Meridian and is also one of the biggest companies in New Zealand.