3. Transaction Structure
Under ERTU's recommendation for the structure of the split, ECNZ will transfer most of its assets and liabilities to three new SOEs. ECNZ will remain as a legal entity in order to manage some important residual assets and liabilities. This structure is outlined in the following diagram.
This structure has the following characteristics:
- the new SOEs will purchase designated assets at book value from ECNZ and be transferred certain of ECNZ's liabilities;
- the Crown will fund this purchase by subscribing for share capital in the new SOEs;
- this will, in turn, be funded by ECNZ returning approximately $2,400 million capital to the Crown; and
- the liabilities that the SOEs receive from ECNZ include a proportion of ECNZ's existing debt which will be configured as establishment loans from ECNZ as outlined in Sections 7 and 8.
ECNZ will remain as an SOE in order to manage a range of residual functions as outlined in Section 11. Section 99 of the Electricity Industry Reform Act 1998 specifically contemplates the possibility of ECNZ remaining as an SOE without the requirement to operate as a successful business.
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