| TRANSACT: VCT: Sale of Vector's Kapuni Assets |
10:13a.m. |
|
| VCT |
| 03/12/2019 10:13 |
| TRANSACT |
| NOT PRICE SENSITIVE |
| REL: 1013 HRS Vector Limited |
| |
| TRANSACT: VCT: Sale of Vector's Kapuni Assets |
| |
| SALE OF VECTOR'S KAPUNI ASSETS AND ENTRY INTO NEW LONG TERM NATURAL GAS AND |
| LPG SUPPLY ARRANGEMENTS |
| |
| Vector has agreed to sell Vector's Kapuni gas treatment plant to Todd |
| Petroleum Mining Company Limited ("Todd"). The Kapuni gas treatment plant |
| processes all the gas produced from the Kapuni field in South Taranaki. Todd |
| holds the licence to extract petroleum products from the Kapuni field and |
| owns gas extraction assets for the field on a site adjoining the Kapuni gas |
| treatment plant. |
| |
| The transaction resets the relationship between Todd and Vector and creates |
| strong alignment in the parties' interests in seeing the Kapuni field further |
| developed. New natural gas and LPG supply agreements will provide Vector with |
| long term access to these products. |
| |
| On completion of the transaction: |
| o Vector will transfer the Kapuni gas treatment plant and associated assets |
| it owns to Todd, including its 50% share in the Kapuni Energy Joint Venture |
| (an electricity and steam co-generation plant located within the Kapuni gas |
| treatment plant) |
| o Vector staff at the plant will transition to Todd employment |
| o Todd will pay consideration for acquisition of the plant and associated |
| assets over the life of the Kapuni field based on a formula that takes into |
| account the field production at Kapuni and processing of LPG and other |
| products |
| o Vector and Todd will terminate the existing Kapuni Gas Contract and enter |
| into new long term agreements for the supply of natural gas and LPG from Todd |
| to Vector. The new contracts will commence from 2021 with agreed interim |
| terms applying between the parties for the supply of natural gas and LPG |
| until this time. |
| |
| As part of the transaction, the parties have agreed to settle all current |
| litigation related to Kapuni gas as at completion. In the period to |
| completion this litigation will be suspended. |
| |
| Vector will receive cashflow over time and the impact to the financials is |
| expected to not be material in the short term. Longer term, the amount Vector |
| receives for the transaction will vary depending on several factors including |
| the amount of reserves in the Kapuni field and the timing of any further |
| development of the field by Todd. |
| |
| Completion of the transaction is subject to a number of customary conditions |
| including the approval of the Minister of Energy and Resources. Subject to |
| meeting these conditions, the transaction is expected to complete in the |
| second quarter of 2020. Vector will be working with Todd over the coming |
| months to ensure a smooth transition. |
| |
| ENDS |
| |
| Investor contact |
| Jason Hollingworth, Chief Financial Officer, Vector |
| Jason.hollingworth@vector.co.nz, 021 312 928 |
| |
| About Vector |
| Vector is New Zealand's leading network infrastructure company which runs a |
| portfolio of businesses delivering energy and communication services to more |
| than one million homes and commercial customers across the country. Vector is |
| leading the country in creating a new energy future for customers and |
| continues to grow and invest in the growth of Auckland, and in a wide range |
| of activities and locations. Vector is listed on the New Zealand Stock |
| Exchange with ticker symbol VCT. Our majority shareholder, with voting rights |
| of 75.1%, is Entrust. For further information, visit www.vector.co.nz |
| End CA:00345358 For:VCT Type:TRANSACT Time:2019-12-03 10:13:04 |
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