July 20 – Buller Electricity Ltd. has agreed to further concessionary terms in its rescue package for low-budget electricity retailer Pulse Utilities Ltd., which will see Buller become the majority owner of Pulse.
The terms of the arrangements originally announced on June 20 envisaged Pulse convertible note holders converting 75% of their holding to shares and 25% to an interest-free five year loan.
However, Pulse sought and obtained agreement from Buller to increase the interest-free loan proportion to 40% of the total notes on issue, with the remaining 60% converting to shares at the rate of three shares to every dollar of notes held.
Today’s statement also says Buller has increased Pulse’s prudential payments to the wholesale electricity market operator, NZX, to $4.5million from $2.8 million, allowing Pulse to continue buying wholesale electricity from the market.
Buller has also injected $900,000 into the company which Pulse managing director Bene Biddlecombe said “substantially eases the company’s cash flow pressures for the rest of winter and puts the company in a secure position while it seeks to finalise the agreement” with Buller.
“The board is highly optimistic of the future prospects for the company given the significant support shown for the company by BEL, note holders and new investors,” said Biddlecombe. Placements of new shares worth $1.5 million with various investors had also been achieved at an issue price of 0.05 cents per share.
“Satisfaction of these conditions was a critical milestone for ensuring that the recapitalisation contemplated under the agreement and necessary to secure the future of the company, was successful,” Biddlecombe said.
Implementation of the various elements still requires shareholder approval, which will be sought at the Pulse annual meeting on Aug. 18, and an independent expert’s report is required as the Buller deal triggers the provisions of the Takeovers Code.
The lightly traded NZAX-listed shares of Pulse lost 65% over their value over the last week, last trading at 15 cents a share.
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