The Government's potential sale of state-owned Kiwibank shares "smacks of political convenience", says Massey University banking expert David Tripe.
New Zealand Post chairman Michael Cullen made the announcement in Wellington yesterday, saying Kiwi Group Holdings had received a collective indicative offer of $495 million from the NZ Superannuation Fund to buy 25 per cent and Accident Compensation Corp to buy 20 per cent - effectively meaning the sale of 45 per cent of the company to the two taxpayer-owned entities.
Under the deal, the Government would have first buy-back rights, with shares unable to be sold outside of the shareholder base within the first five years.
Cullen said the offer reflected the Government's assurance that the company would remain in public ownership, but Tripe said this was not necessarily an assurance that would be upheld by future governments.
"If they do want to do a public listing they have to, at this stage, offer them to the Government, but it's not a commitment for future governments," Tripe said.
"Future governments, if they're under budgetary pressure, could say okay, let it go."
Tripe said the deal was a convenient one with the Super Fund and ACC buying into the group, because it dealt with a government budget issue of how to pump capital into Kiwibank. But he said it seemed like a short-term fix.
"It smacks of political convenience and various other things and it's possible that the sale price is artificially low," Tripe said. "I'd certainly be interested to know what the exact terms and conditions are - at the moment it looks like a transaction for political convenience that isn't actually going to do a lot to help Kiwibank," he said.
The announcement comes a week after NZ Post announced it was planning to cut up to 500 jobs in the next three months, as part of the 1500 to 2000 job losses signalled at the end of 2013.
The company said declining mail volumes and an annual $20 million to $30 million fall in revenue was putting pressure on the business, with 60 million fewer letters being sent every year.
Proceeds from the sale won't generate any extra capital for Kiwibank and would be used mostly to pay down NZ Post's debt and invest in its core business.
Based on estimated market valuations of Kiwibank, Tripe said, both the Super Fund and ACC could be buying in at a relatively cheap price, saying the $495 million buy-in was "around book value".
"I still think that is a non-commercial sale price and that may be a justification for the Super Fund and ACC to buy into it at that price."
At the meeting, Cullen said the deal had not been finalised, but NZ Post wanted to be proactive in its disclosure.
"We believe this is the right time to engage in this," Cullen said.
"We will be able to retain, first of all, some money to pay down debt, and also to retain some cash as a cash asset because we have some major restructuring to do," he said. "From this we will be a much better fit for purpose mail and communications company for the future."
The transaction is planned to be completed by the end of NZ Post's current financial year on June 30.
Read the statements issued by both companies here: