Wednesday 27th March 2019
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Hawke’s Bay Regional Council has approved the creation of a new holding company to advance the sale of shares in Napier Port.
The council will decide in coming weeks whether to proceed with the sale of up to 49 percent of the port through an initial public share offer.
Today it approved the creation of Napier Port Holdings, the shares of which would be offered in the minority IPO and listing on NZX.
The new vehicle simplifies the process by not requiring the port company and the council’s investment arm, Hawke’s Bay Regional Investment Company, to make a joint offer. Responsibility for the IPO will also sit with the port company directors, who will also be directors of the new holding company.
The new structure “will ensure any share offer is made through one organisation and that liability for the listing and ongoing port performance would sit with the right parties – the listed company and its directors,” council chair Rex Graham says.
The council is pursuing the sale to help fund the port’s expansion and to meet its own growing capital requirements for environmental remediation, climate change and flood control work.
It went to its ratepayers in October recommending the share sale. It expected then that the sale could raise $181 million – leaving the council with $83 million after settlement of almost $87 million of port-related debt and sale costs of about $11 million.
The council today approved other measures intended to provide additional protections for the region’s ratepayers.
The council’s holding will not be able to be reduced below 51 percent and it will also get to appoint two “appropriately qualified non-independent directors” to the boards of both the port and Napier Port Holdings.
Information sharing protocols and confidentiality agreements will also be established between the companies and the council, subject to parameters set by the Companies Act and the NZX listing rules.
Other protections approved today included lowering the major transaction threshold - at which the port must seek shareholder approval – to 30 percent of the port’s gross assets, from the 50 percent specified by the Companies Act.
A restrictive covenant will also be placed over the main Westshore site, restricting its use to port purposes and restricting any sale of land without council consent.
Graham said the council is working with the port and its advisers in preparation for the potential sale, including ways to ensure locals wanting to buy shares are prioritised.
The port is being introduced to a range of New Zealand and offshore investors to gauge appetite for the sale and a final decision is expected in four to six weeks, he said.
Given the council’s majority stake, and likely interest from locals and New Zealand institutional investors, domestic ownership is likely to “remain high” post the share offer, he said.
The regional council’s next full meeting is on May 1.
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