Thursday 7th March 2013
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Labour Party MP's took MightyRiverPower's leadership to task over plans to list the state-owned electricity company on the Australian stock exchange in its first appearance before a parliamentary select committee since the government confirmed its part-privatisation.
The company also faced accusations of taking a "smart-arsed" approach to the questionnaire prepared by Opposition MPs, many of which it didn't answer because they were framed for government departments rather than government-owned businesses.
Labour's Clayton Cosgrove and David Clark focused especially on chairwoman Joan Withers' personal view, based on her experience as chair of Auckland International Airport, that a dual-listing improved the "after-market" for MRP shares.
"Some people are scratching their heads that if we want mass kiwi ownership that it should be listed on the ASX," said Cosgrove.
Withers replied there was "good pricing tension having Australian investors being able to participate" and some major Australian institutional investors required ASX-listed shares in order to invest.
"So it's advantageous that Australian institutions gain shares," said Cosgrove, to which Withers replied: "It will ensure a healthy after-market."
MRP chief executive Doug Heffernan said shareholders would get better value for their shares by dual-listing.
"The consideration for the company is the performance of the after-market for these shares," he said. "Eight out of 10 of New Zealand's largest companies see ASX listing as the shares being better priced. The alternative would be less consistent and less accurate pricing if that tension wasn't there."
Cosgrove also pressed Withers on whether it was appropriate to float MRP at a time of flat electricity demand, but she would not rise to the bait, reflecting severe legal constraints imposed by securities legislation during the period ahead of a sharemarket listing.
Privatised power companies have previously held ASX dual-listing. Contact Energy, privatised in 1999, held an ASX dual-listing until the mid-2000's, when the costs were judged too high and its Australian majority shareholder, Origin Energy, was ASX-listed.
MRP will remain 51 percent-owned by the government after privatisation.
Clark accused MRP of giving the select committee "a two-fingered salute" for refusing to answer its questions, with Heffernan retorting it was the first time in 14 years as CEO at MRP the committee had addressed the questionnaire.
National's Sam Lotu-Iiga said the issue had been raised before and it was "just lazy" that the questionnaire hadn't been updated for use by SOE's.
Outside the hearing, Heffernan said the company would have answered the questionaire if it had been addressed to an SOE rather than a government department.
Asked how many credit cards MRP operated, Heffernan said there were three, used for administrative purposes.
"No employee has a credit card," Heffernan said.
Heffernan raised the company's concerns with the Electricity Authority's controversial proposals for transmission pricing as a "highly unusual approach", although MP's did not raise the issue in the hour they spent with the EA prior to the MRP hearing.
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