Mighty River Power share deal announced

06:40, Mar 04 2013
Tony Ryal
State Owned Enterprises Minister Tony Ryall.

Kiwis are guaranteed up to $2000 worth of shares if they want to buy a stake in Mighty River Power, the Government has announced.

Prime Minister John Key today unveiled the Government's plans for its first partial sell down of a state-owned asset.

Pre-registration for shares in Mighty River will open tomorrow.

Tony Ryal
Finance Minister Bill English.

"My expectation is that, subject to market conditions, this process will be completed in mid-May, most likely before the Budget," Key said.

The Budget is May 16.

The offer period was expected to open in mid-April and run for three weeks and to buy shares Kiwis would have to invest  a minimum $1000. There would be no scaling back for New Zealand citizens up to $2000.


John Key
Prime Minister John Key.

''As we've promised, New Zealanders will be at the front of the queue for shares. The actual allocation of shares will be made in decisions by Ministers. Before we reach that point we want to make it as easy as possible for New Zealanders to get access to information, register their interest and apply for shares,'' John Key said.

He was "very confident" of achieving the target of 85-90 per cent New Zealand ownership.

''The government expects to free up between five and seven billion dollars, less than 3 per cent of its total assets, to invest in other public assets like modern schools and hospitals, without having to borrow in volatile overseas markets,'' Key said.

Labour leader David Shearer said Kiwis were being asked to buy something they had consistently said they did not want to sell. A petition against asset sales was likely to lead to a referendum on the issue, and the sale should not take place until after that took place.

"Over 80 per cent of New Zealanders have consistently said they are against asset sales. There are 390,000 Kiwis who have signed the petition calling for a referendum. New Zealanders must have their say,'' Shearer said.

''The Government should hold the referendum this year and listen to the will of the people.''

It was "technically possible" but unlikely that the company would be 100 per cent New Zealand owned if demand was high enough, English said.

Asked what the Government would do if demand from Kiwis was not high enough to meet the 85 per cent ownership target, English said he was prevented from saying because of the Securities Act.

Mighty River Power's 800 New Zealand based employees would be guaranteed up to $5000 worth of shares, State Owned Enterprise Minister Tony Ryall said.

There would be a loyalty bonus for New Zealand retail investors who held their shares for a minimum period, although the terms of this were not announced.

Ryall and Finance Minister Bill English will travel to Auckland tomorrow to launch the pre-registration programme. People would be able to call an 0800 number and leave their details, with a prospectus then sent out.

This did not constitute a requirement to invest money, English said.

English said a price range for Mighty River would be published within weeks. Mighty River's current value was $3.6 billion, although this was not necessarily what the Government expected to raise, English said.

Ryall said the budget for the advertising campaign for Mighty River was $1.1 million.

The asset was expected to have a secondary listing on the ASX, however, English said there was nothing unusual about it having an ASX listing. Eight out of 10 of New Zealand's largest listed companies listed there.

The retail offer was only available to New Zealanders,  Ryall said. A pre-registration website had been designed to discourage those from outside New Zealand from participating.

Kiwis living overseas wanting to buy shares would have to prove they had a New Zealand bank account, IRD number and a postal address.

The book build process would "unashamedly" favour New Zealanders, Key said. Ryall declined to say how much of the 49 per cent which had been put up for sale would go to retail investors.

English said the Government had focused on getting the programme started, but it would not rule out attempting to sell both Genesis Energy and Meridian Energy later this year.

"These company have real commercial risks," English said, when asked why the Government would sell cash generating companies when it could borrow at a low rate from international bond markets.

Key would not comment on how much the Government was willing to give away in the loyalty programme under which Kiwi investors would get bonus shares, but said it was an important part of the overall programme.

Asked if the advertising campaign would be political, Ryall said it had gone through the usual Treasury checks for Government advertising.

New Zealand First leader Winston Peters said measures taken to make it easy for New Zealanders to get the shares would create easy loopholes through which the shares would quickly fall into foreign hands.

"The so-called promise of Kiwi Mums and Dads being first in the queue is a transparent exercise in deception. Kiwi Mums and Dads are first in the queue now - they own these assets outright.''

In mid-April the Government will lodge an investment prospectus with the Financial Markets Authority, at which time it will be available for the public to read.

The initial offer will only be open to New Zealanders, closing on 22 March.

Mighty River Power was always going to be first off the block and the way was cleared when the Supreme Court turned down a Maori Council appeal on water-ownership.

The company last month reported a net profit for the six months to December 31, of $75.5 million, up from $17.6m a year earlier.