Port company defends $132m capital payout

By Graeme Kennedy

Friday 19th October 2001

GEOFF VAZEY: Doing more for less

Ports of Auckland's decision to return $132 million of capital to its shareholders would not affect the company's current or future works programmes, chief executive Geoff Vazey said.

Mr Vazey said that while there would be no cutbacks, the port always sought ways to wind back capital expenditure to better manage programmes.

"We look to do that without affecting our ability to grow and provide service to our customers," he said.

"We have managed to slow capital expenditure and do the same amount of business which, divided by a lower asset base, creates wealth by earning the same amount but using less money. We would invest $100 million only if we could make a return out of it. Anything like that would have to stand on its own feet on a commercial basis."

The port's major capital programmes are dredging the Rangitoto commercial shipping lane and harbour approaches, reclamation of the Fergusson container terminal and establishment of a series of "micro-ports" in Auckland's southern industrial areas.

Mr Vazey said the $132 million payment, which included about $100 million to 80% shareholder Infrastructure Auckland, was part of a reassessment of the balance sheet structure and particularly the debt-equity ratio.

The company's total interest-bearing debt to debt plus equity would be about 50%, a ratio "about right for us - a bit conservative but we don't want to be too bullish given the current uncertainty in the international situation," he said.

* Rating agency Standard & Poor's reacted to the capital repayment by putting the company on CreditWatch negative, noting its debt ratio would rise and weaken the company's financial measures.

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