Contact Energy Ltd (NZX & ASX: CEN) has sold its ownership of Rockgas Ltd to Gas Services NZ Midco Ltd (GSNZ) - an associate of First Gas Ltd.
The cash consideration for the deal was $260 million.
Rockgas held Contact’s LPG operations as well as 50% of the issued shares in Rockgas Timaru Ltd and an 8.5% investment in Liquigas Ltd.
As part of the transaction, Contact will enter into an exclusive marketing alliance with GSNZ to be able to continue to offer LPG to mass market customers. In addition, Contact will enter into a services agreement to provide call centre and billing services for mass market LPG customers.
Contact said yesterday that its strategy was to optimise the customer and generation businesses to deliver strong cash flows for distribution to shareholders. Rockgas purchases LPG from NZ producers - and when necessary, imports LPG.
This was done at prices linked to international commodity indices.
Rockgas supplies over 88,000 customers through an extensive branch and franchise network, which has national distribution coverage.
Contact said the Rockgas business was markedly different to the generation of electricity at single sites and retailing of electricity, natural gas and broadband, which are distributed on networks not owned or controlled by Contact.
The company said divesting Rockgas will give greater focus and allow for accelerated transformation in the customer business, delivering digitally-led customer experience improvements and ultimately creating value for shareholders.
Completion of the sale was subject to fulfilment of certain conditions. These include GSNZ obtaining the required consents under the Overseas Investment Act 2005 and the consent to change of control or assignment or novation of agreements from a limited number of contractual counter-parties.
Contact was targeting satisfaction of these conditions and completion of the transaction by the end of this year.