✨ Financial Statements and Asset Sale
2 DECEMBER
NEW ZEALAND GAZETTE
4597
ELECTRICITY CORPORATION OF NEW ZEALAND LIMITED
NOTES TO THE FINANCIAL STATEMENTS
- MEMORANDUM OF UNDERSTANDING (MoU) (Cont.)
| Years Ahead | Reserve Price |
|---|---|
| 1996/97 | 4.35 |
| 1997/98 | 4.43 |
| 1998/99 | 4.40 |
| 1999/00 | 4.50 |
| 2000/01 | 4.55 |
d) Acquiring Energy Companies
ECNZ will not acquire any energy company, as defined in section 2 of the Energy Companies Act 1992, or any significant share in an energy company.
- SALE OF ASSETS TO CONTACT
Pursuant to the MoU (note 25), ECNZ signed an agreement with Contact on 13 November 1995 to sell 8 power stations at book value on 1 February 1996. The power stations sold were New Plymouth, Stratford, Whirinaki, Otahuhu, Wairakei, Ohaaki, Clyde and Roxburgh. The Clutha River and geothermal development sites were also included in the sale and ECNZ surrendered its existing rights under the Maui gas contracts.
As part of the settlement, ECNZ received $1,592 million from Contact on 1 February 1996. $419 million was used to defease debt and the balance of $1,173 million was treated as surplus equity and distributed to the Crown. The effect of the sale on the financial position of ECNZ was as follows:
| Unaudited Statement of Financial Position as at 31 January 1996 | Unaudited Assets Sold/Debt Defeased | Unaudited Statement of Financial Position as at 1 February 1996 |
|---|---|---|
| $M | $M | $M |
| Current Assets | 79 | 495 |
| Non Current Assets | 1,526 | 2,620 |
| Current Liabilities | (13) | (319) |
| 4,388 | 1,592 | 2,796 |
| Non Current Liabilities | 532 | 1,193 |
| Equity | 1,060 | 1,603 |
| 4,388 | 1,592 | 2,796 |
- FAIR VALUATION AS AT 1 FEBRUARY 1996
In accordance with the MoU (note 25), ECNZ has reviewed its asset values. The purpose of the review was to adjust ECNZ’s financial structure to reflect the establishment of a competitive wholesale electricity market and to ensure that ECNZ’s asset values are appropriate for its ongoing operations in the competitive environment. The sale of assets to Contact on 1 February 1996 at book value, rather than a negotiated market value, was the first step towards the creation of a competitive generation market. In effect, two new companies have been created to operate in the new market environment.
To reflect the underlying substance of the restructuring of ECNZ and the generation industry, a fair value exercise was performed as at 1 February 1996. The book values of assets and liabilities were adjusted to fair value, by a valuation of the business based on projected net future cashflows. The resulting surplus was allocated between the underlying assets and liabilities, and the net difference was credited to equity. The fair value exercise does not constitute the adoption of modified historical cost accounting.
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VUW Te Waharoa —
NZ Gazette 1996, No 174
NZLII —
NZ Gazette 1996, No 174
✨ LLM interpretation of page content
💰
Memorandum of Understanding (MoU) between ECNZ and the Crown
(continued from previous page)
💰 Finance & Revenue8 June 1995
MoU, ECNZ, Crown, Power Stations, Treaty of Waitangi, Generating Capacity, Reserve Prices
💰 Acquisition Restrictions for Energy Companies
💰 Finance & RevenueECNZ, Energy Companies, Acquisition Restrictions
💰 Sale of Assets to Contact
💰 Finance & Revenue13 November 1995
ECNZ, Contact, Power Stations, Asset Sale, Financial Position
💰 Fair Valuation of ECNZ Assets
💰 Finance & Revenue1 February 1996
ECNZ, Fair Valuation, Asset Review, Financial Restructuring