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Powerco Purchases AGL Hutt Valley and Porirua Basin Gas Network
25 June 2001

Powerco Chairman Barry Upson announced today that Powerco has been confirmed as the successful purchaser of AGL's Hutt Valley and Porirua Basin gas network. The sale will take effect over the next four weeks.

The purchase comprises approximately 1000 km of gas assets for $102.5M and meters and regulators for $15.5M. This expands Powerco's gas network to around 2000 km, which will result in the company holding 22% of the national market in terms of gas connections.

"We are very pleased to announce this exciting result which represents significant gas industry growth for us," said Powerco's Chief Executive, Steven Boulton.

"This acquisition gives Powerco further opportunity to both grow and diversify our connection base and enhances our ongoing success."

"The network is relatively modern due to recent refurbishments and upgrades, and has a strong record for reliability and quality of supply".

Currently, the AGL network passes approximately 59000 properties with a take-up rate of 47% and a comparatively high annual demand per residential connection. In addition new subdivisions have provided a regular annual increase in connections to the network.

This latest move builds on Powerco's track record for strong growth. The company has successfully completed four mergers and/or acquisitions in five years and listed on the New Zealand Stock Exchange late last year. The benefits of Powerco's most recent merger with neighbouring CentralPower were reflected in a year-end profit, announced last month, that was ahead of forecast.

"We have proven expertise in capturing merger benefits which gives us every confidence that this latest acquisition will strengthen significantly our strategic position in the lines and pipes sector." Mr Boulton said.

Mr Boulton indicated that Powerco intended to pursue further growth through acquisition or diversification: "International and local trends indicate potential disaggregation of network businesses into three core areas - network ownership, asset management and field services in construction and maintenance."

"Powerco has proven expertise in all three areas and will continue to pursue opportunities to acquire new electricity and gas networks, as well as opportunities to manage and service other networks such as water or telecommunications."

The purchase of the gas assets will consolidate Powerco's position as New Zealand's 3rd largest network utility in terms of total customer connections. The company will now have 155,000 electricity customer connections and around 48000 gas customer connections.

Powerco was advised by Macquarie New Zealand on these transactions.