Contact seeks $400m to build Tauhara

AUCKLAND: Contact Energy has begun a $400 million equity raising to build a new 152MW geothermal power station at Tauhara, near Taupo.

The company said it planned to raise $325 million from an underwritten institutional placement at $7 a share, a 2.8% discount to Friday's closing price, and a $75 million nonunderwritten retail offer.

The company's shares have been put into a trading halt until tomorrow while it undertakes the placement.

At the same time, Contact reported a statutory first half profit of $78 million, up 32% on the same period last year.

Ebitdaf increased by

$25 million to $246 million, up 11% on the previous year and in line with market expectations.

Operating free cash flow for the period increased from

$120 million to $157 million in the first six months, up 31% yearonyear.

Contact said it was a strong financial performance, despite uncertainty of gas availability and the nearterm future of major energy users.

The company announced a cash dividend of 14c per share, down from 16cps in the previous corresponding period.

Contact said the $400 million would support the $580 million of further investment required to develop Tauhara.

Chief executive Mike Fuge said it had been a heartening start to the year in a complex environment.

‘‘We're pleased to have delivered a strong financial result despite challenging headwinds in the form of ongoing uncertainty around gas availability, and the doubt swirling around the future of the Tiwai Point smelter until the extension announced a month ago.’’

Chairman Rob McDonald said market conditions now allowed Tauhara to proceed after being in the planning stages for more than a decade.

‘‘We believe the Tauhara geothermal project is New Zealand's best lowcarbon renewable electricity opportunity,’’ he said.

Construction is expected to be completed in the middle of 2023. — The New Zealand

Herald