Trustpower flags asset writedown

Trustpower says it might have to write down the value of its generation assets by as much as $170 million after revising its view on future electricity prices.

A draft independent valuation indicates the electricity retailer generator will have to cut the value of its generation assets to $1.85-1.9 billion from about $2.02b from March 31, it said.

The adjustment will largely be on the balance sheet, hitting the company’s equity, but chief financial officer Kevin Palmer said it won’t affect Trustpower’s profit.

Trustpower has been a beneficiary of favourable weather, where its hydro schemes were flush at a time when the national average hydro storage was below average and the Pohokura gas field outage drove up wholesale prices. It expects to report earnings before interest, tax, depreciation, amortisation and changes in financial instruments of $215-235m for the year ending March.

Separately, Trustpower launched a 10-year bond offer to raise up to $100m with a five-year rate reset. The offer is for $75m with oversubscriptions of up to $25m. The 2029 notes will be sold at an indicative margin of 1.9-2.05 per cent. At today’s five-year swap rate of 1.93 per cent, that implies an interest rate of 3.83-3.98 per cent. After five years, the rate will be reset at either 3.95 per cent or the issue margin plus the base rate, whichever is the higher.