Payout may be Australasia's biggest

ALAN WOOD
Last updated 05:00 30/03/2013

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Lyttelton Port of Christchurch's stalled insurance claim "is potentially the largest ever in Australasian history", new information reveals.

The Press requested under the Official Information Act documents and reports from Lyttelton Port's 79.5 per cent shareholder Christchurch City Holdings (CCHL), a ratepayer-owned company, related to the port's insurance claims.

But little information was supplied.

No documents were supplied as asked but extracts were selected, presumably from reports or documents or emails, and sent in a two-page letter to The Press.

No information was supplied on the total size of the claim or on the details of the port's claim process.

Discussions between the port and insurers have been going on since the first damaging quake on September 4, 2010.

The other large shareholder in the port is rival Port of Otago holding a 15.48 per cent stake.

It has at LPC annual meetings asked for better estimates of the repair cost and what it says is a potential insurance shortfall.

In the short response to the OIA request, CCHL chief executive Bob Lineham made a number of references to discussions with the port. These included a briefing by LPC chief executive Peter Davie in March 2011 about the major issue of insurance.

The OIA response mentions that five points have been excluded because if made public they could prejudice commercial activity.

"Insurance is of course a major issue for LPC (one sentence excluded from here).

"There are indications that getting future cover may be problematic," Lineham said in the OIA response.

"LPC's claim is potentially the largest ever in Australasian history. (One sentence excluded from here). There are indications that getting future cover may be problematic."

Previously, Davie and chairman Rodger Fisher have refused to disclose publicly any estimate of the total damage at the port despite a request to do so by the Ports of Otago.

However, given that about 500 port assets including the head office building in Lyttelton, wharves and piles have been damaged, there is one rough estimate of a $500 million damage total.

The port is in discussion on a draft reinstatement plan for the harbour structure plan and is receiving feedback from insurers, with construction planned to start in 2013.

Asked why CCHL had surprisingly little information about a company in which it has a majority stake, Lineham noted LPC was a listed company and therefore needed to be careful not to provide a single shareholder with information which was not publicly available. "We have a lot of satisfaction that we've got good directors and good management there that are dealing with the issue as best they can.

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"It's not really up to us to interfere in the detail of it anyway."

He thought CCHL had been told enough about the insurance issues, given the company was "doing a good job on it".

Disagreeing with that view is Port Otago, which raised pointed questions about Lyttelton's disclosure over earthquakes at LPC's annual meeting.

Port Otago is worried about a gap between the amount of damage at Lyttelton port and how much will be paid out by insurance.

At last year's annual meeting in November, Fisher said he did not know these totals and that the port ran a full disclosure approach.

The amount insurers have paid out so far remains stalled at $35.7m.

The last payment was made in May 2011, the port confirmed in its first half result last month.

In 2012 the port had put a cap on spending about $50m on repairs to get the port to a state to allow satisfactory operations, until the insurance dispute was resolved.

This week Fisher said the spend remained about that level.

INSURANCE IMPASSE NOT BEHIND CHAIRMAN'S DECISION TO QUIT

Lyttelton Port of Christchurch's Rodger Fisher says an insurance impasse has relatively little to do with his decision to step down as chairman of the port company from June 30.

However, he does acknowledge the extra time spent dealing with insurance issues on behalf of the port have been significant. This week Fisher announced he will step away from the board role later this year after nearly 11 years as an LPC director. He will remain as a director until the port's annual meeting in November.

Fisher said his term was due to finish at this year's annual meeting in November, and he felt a decade as a director was enough time to serve a company. He made the decision to stand down over the Christmas break.

There had been a request by LPC's majority shareholder, Christ church City Holdings, for him to stay.

"It's fair to say that I was asked to stay on for another term. But I decided, and it's something I've always believed . . . I've been chairman for six years I think, and I've always felt that 10 or 11 years is about the right length of time to be involved. I think you need to make sure that you are continuing to refresh the board."

The business was stable and had grown significantly in his time, he said. "Touch wood, we haven't had a quake for some time, and things are moving along . . . we're trading along pretty well."

He felt the insurance claim was "a process situation", in terms of talks with insurance companies, but was very hopeful there would be a resolution on the claim, with substantial progress hoped for in the next few months.

"We'd like it to be faster but it's going along OK. And really the other thing is, it's taken a hell of a lot of my time . . . if you look at it for the last three years we've been involved in the quake and the events of the quake."

Fisher said his time would now be devoted to other directorships and his family.

- BusinessDay.co.nz

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