Christchurch City Council dumps plan to sell City Care
Christchurch City Council has abandoned the City Care sale, but now needs to find another $110 million from its assets.
The council announced on Monday it made "commercial sense" to keep its maintenance and construction company, following "a rigorous sale process".
Campaigners opposing the sale have hailed the move as a "victory for common sense".
Price was a factor in the council unanimously agreeing to ditch the sale, but other associated conditions also played a part, council strategy and finance committee chairman Cr Raf Manji said.
At the end of the process, the council had just one offer left on the table.
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The council decided in November last year to sell City Care as the first step in a capital release programme aimed at raising up to $200m during the 2015-16 financial year from council-owned commercial assets. Some $80m was obtained from Orion and the council had been hoping to garner $110m from City Care.
Manji said the council still planned to release that amount of capital from its investment arm Christchurch City Holdings Ltd, which manages more than $1.5 billion of assets for the council – it just won't be coming from the sale of City Care.
When asked if the decision not to sell would put pressure on the council to find money by selling another company, Manji said no.
"The reality is we have to get the cash from the other companies, but of course it could be debt as well as equity."
He said the council would decide over the coming months when it would require that money. It was already seeking $200m from CCHL in 2017-18 and another $200m the following year.
The council has asked CCHL to restructure its companies so it could release capital without selling assets. One option was for CCHL to take on more debt.
When asked if the council might put City Care back on the market at another stage, Manji said the sale process had concluded and the council was now focused on making the company perform better.
He said continued opposition to the sale from Keep Our Assets Canterbury had no influence in the council's decision not to proceed.
Mayor Lianne Dalziel said last year's decision to seek interest in the sale of the council-owned company was always based on getting the best commercial outcome for the city.
"When the council reviewed the preferred offer we decided that there was not a compelling case to conclude the sale."
A City Care worker, who did not want to be named, said he and his colleagues were relieved months of uncertainty were over.
"It's bloody good to know that none of our infrastructure is going overseas like quite a few of us thought and it's good to know that our jobs are still safe."
The mayoral candidate for Canterbury's Keep Our Assets group, veteran protester John Minto, described the news as "absolutely wonderful".
"What I would like the council to do is at the same time take the whole asset sale thing off the agenda," Minto said.
The announcement was a "good way" to start his campaign, Minto said.
"One [policy] down and five to go," he said.
Keep Our Assets convenor Murray Horton said the sale being called off was a "long overdue victory for common sense".
"We said from day one not only is there no political justification, but no commercial justification," Horton said.
It was "madness", he said, for council to part with City Care in the middle of the rebuild.
The sale could have been seen as a "political hot potato" close to the election, which could have played some part in the decision not to sell, Horton said.
Failing to find a buyer could also have influenced the decision, he said.
The Labour-aligned People's Choice group said they were "highly supportive" of the council's decision to retain City Care.
Cr Pauline Cotter said the sale would only provide a short-term solution and said People's Choice had maintained there was never a need to sell the city's assets.