Adam Bennett

Adam is a political reporter for the New Zealand Herald.

Legal fight over asset sales likely

Aroha Priest, of Wellington, during a small but vocal protest against the sale of state assets at Parliament yesterday. Photo / Mark Mitchell
Aroha Priest, of Wellington, during a small but vocal protest against the sale of state assets at Parliament yesterday. Photo / Mark Mitchell

The Government is eyeing market turmoil and legal challenges from iwi as possible delays to its plan to sell about $1.7 billion of shares in Mighty River Power by the end of September.

Against bitter and loud opposition, the National Government yesterday narrowly passed legislation underpinning its plan to reduce debt and pay for new infrastructure by the partial sale of four state-owned energy companies.

State Owned Enterprises Minister Tony Ryall said the legislation was "part of the National Government's wider economic plan to control debt and keep investing in our economy".

The sale of up to 49 per cent of Mighty River Power, Meridian Energy and Genesis Energy, along with coal company Solid Energy and later on a smaller stake in Air New Zealand, is expected to net the Government $5 billion to $7 billion.

Mr Ryall said the Government would make a decision "in due course" whether to proceed with the sale of shares in Mighty River Power which would take place some time before the end of September, "market conditions allowing".

His proviso is significant as Prime Minister John Key has previously said the European debt crisis - which may have global repercussions - was not likely to affect the asset sales plan.

Mr Key yesterday also acknowledged that possible legal challenges from Maori were a risk to the timing of the partial sales programme.

Both parts of the Mixed Ownership Model Bill, which had previously been split in two, were passed by 61 votes to 60 yesterday with National's 59 votes bolstered by those of its single-member coalition partners Act and United Future.

During the occasionally rowdy third reading debate, Opposition parties heaped scorn on United Future's Peter Dunne for his support of the legislation.

He was the target of a small protest of about 35 people outside Parliament yesterday, but was absent from the final debate as he was said to be attending a family funeral.

National's other support party, the Maori Party, voted against the legislation on the grounds that outstanding Treaty claims that may involve energy company assets should be settled first.

Labour leader David Shearer said the passing of the legislation was a "national tragedy" for which Mr Dunne and National would be punished.

"This obnoxious law was passed by a wafer-thin majority thanks to a politician who got just 0.6 per cent support from Kiwis at the last election.

"It is a travesty. Peter Dunne and National MPs will pay dearly for their actions when voters get their say at the next election."

He said the fight against the sales programme was not over.

"It simply moves from the debating chamber out on to the streets. New Zealanders are queuing up to sign the petition for a referendum."

In response to questions from Mr Shearer, Mr Key said the Government had long been aware of the litigation risk but if it eventuated it was not likely to affect returns from the sales programme.

The possible legal challenges are an urgent Waitangi Tribunal hearing in July dealing with claims by the Maori Council and others, and from Central North Island iwi Ngati Tuwharetoa which has claims over the lakes and rivers used by Mighty River and Genesis.

Finance Minister Bill English would not rule out putting shares aside to use in a settlement which was likely to happen after the asset sales process.

But Mr Key said it was more likely Ngati Tuwharetoa would receive cash to buy shares or the Government itself would buy shares on the open market to give to the iwi.

TIGHT DEADLINE ON SHARES

The Government is facing a tight deadline with its plan to sell shares in Mighty River Power by September.

While legislation allowing the sale passed yesterday, "commercial work" including the process of selecting the syndicate of sharebrokers and banks that will market and sell the shares to New Zealanders had been under way for some time, State-Owned Enterprises Minister Tony Ryall said.

But Finance Minister Bill English said the sale would have to wait for a couple of months, by which time Mighty River was expected to have completed its June year accounts so investors could properly assess the firm's value.

Once that information is published in offer documents, the shares will be sold through a "bookbuild".

That means that after setting an indicative price range, the managers of the sale will accept bids for shares from institutional investors such as KiwiSaver and other retirement funds in a process akin to a tender or auction.

That process will set the price of the shares for "mum and dad" or retail investors who will apply to buy shares from a "pool" held aside. Retail investors are expected to be able to buy a minimum of $1000 of shares. The Government has indicated it will offer a loyalty scheme with incentives for buyers to keep their initial holding for a set period.

- NZ Herald

Your views

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_n3 at 20 Sep 2014 03:31:24 Processing Time: 853ms