Asset sale 'screwed' NZ buyers

TIM HUNTER AND STEVE KILGALLON
Last updated 05:00 27/07/2014

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A controversial American couple are the biggest investors in recently floated Genesis Energy - sparking angry claims the Government has been caught out "screwing the scrum" against mum and dad Kiwi buyers.

A copy of the Genesis share register compiled immediately before its stock exchange listing in April shows American pet-food barons Christopher and Leegena Weinberg held 1.05 million shares, which would have cost $1.6m. At current prices, those shares would now be worth about $1.9m - a $300,000 profit for the Weinbergs.

That large shareholding is despite allocations to thousands of ordinary New Zealanders being substantially reduced, with Labour and the Greens attacking the Government for its handling of the float.

"This government plainly govern in the interest of the wealthy few . . . and now they have allowed their own share sale to be manipulated in favour of wealthy overseas investors - and that's not fair to New Zealanders," said Labour economic spokesman David Parker.

The Weinberg's wealth appears to stem from a pet-food business called Waggin' Train. In 2007, they sold a majority stake to a private equity firm, before selling out completely in 2010.

Since 2007, Waggin' Train has been investigated by the US Food and Drug Administration over complaints dogs became ill or died after eating its Chinese-made chicken jerky treats. The FDA has reports that 5000 dogs have fallen ill, and more than 1000 had died.

The Weinbergs, who renounced US citizenship last year, were joined on the register by a who's who of wealthy investors, including interests associated with Sir Eion Edgar, Lyn Erceg, Peter Masfen, Rod Duke, Stefan Lepionka and Peter Francis, whose stakes were all at least 250,000 shares.

Greens co-leader Russel Norman said the Government had made a "big song and dance" about the float being for ordinary Kiwis. "That was always untrue. The concern was it was going to really wealthy people and companies and a lot would go offshore - and that's exactly what happened."

The popularity of the Genesis offer meant "mum and dad" investors were restricted to 3226 shares, or $5000 worth. While all investors were scaled back from their original requests, sharebrokers' clients were able to gain much larger stakes.

An industry source said it was up to brokers how they split their allocation: so if they wished, they could give bigger chunks to clients such as the Weinbergs. The source said the Mighty River Power float, where there were no stockbroker allocations, was probably fairer, but the Government had taken a more cautious approach with Genesis after the poor result of the first sale. The source said the fairest method might be to cap share applications.

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Parker said the Government had "allowed the scrum to be screwed" in favour of wealthy people connected to the agents employed by the Crown to do the share floats. "There's no doubt that inequality is rising in New Zealand and this is one of the things that causes it."

Finance Minister Bill English said more than 68,000 New Zealand investors were allocated Genesis shares, making it the third-largest New Zealand share register at the stock exchange. Everyone who applied for up to 2000 shares received them and the float had exceeded the target of 85 per cent local ownership.

"In fact, Genesis was 88 per cent New Zealand-owned after the float - and less than a quarter of the share offer went to offshore institutions including [the Weinbergs]. These companies are still majority owned by New Zealand taxpayers and the Government has $4.7 billion to invest in new public assets, without having to borrow the money."

The Government owns 51 per cent of Genesis, and earned $733m from the partial sale. A Treasury spokesman said it believed the sale process was robust: "To ensure a fair and transparent process, the database with the names and other details of people applying for shares was held by the share registrar and was not accessible to officials."

Efforts to contact the Weinbergs were unsuccessful. The address given for their shareholding is also the office of Auckland law firm Cone Marshall, which specialises in advising "global families".

- Sunday Star Times

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