29 Apr 2011

Contact looking to raise $350m for new generation

7:06 am on 29 April 2011

Contact Energy is hoping to raise $350 million to fund investment in new generation.

New Zealand's largest listed energy company will issue 69,503,327 new shares in the one-for-nine rights offer, which has been fully underwritten.

Shares will be offered at $5.5 cents, a discount of nearly 14% on Wednesday's closing price of $5.86.

Origin Energy, which owns 52% of Contact's shares, will take up the offer.

Contact's chief executive, Dennis Barnes, says the funds will be invested in new generating capacity, in particular the Te Mihi geothermal plant near Taupo, which is due to be completed by mid- 2013.

The offer is underwritten by Deutsche Bank, Craigs Investment Partners and Goldman Sachs.

Meanwhile, Contact says its Stratford peaker station, which is due to begin running next week, and its gas storage facility which opened in Februrary, will play important roles in helping it avoid market volitility this winter.