No restrictions on SOE share sell-ons

No restrictions on who Kiwis can sell SOE shares to, but government still considering loyalty scheme; A lot still to be done, English says

22nd Mar 12, 4:58pm by Alex Tarrant

By Alex Tarrant

There will be no restrictions placed on New Zealanders allocated shares in partially privatised State Owned Enterprises regarding who they can sell the shares on to, Finance Minister Bill English says.

But he said that does not mean the government is leaning away from investor loyalty schemes for Kiwis allocated shares in the initial public offerings of the companies, something Treasury still has a lot of work to do on.

Opposition parties have raised concerns that shares allocated to New Zealanders from four partially privatised energy SOEs would just be on-sold to foreign investors, meaning dividend payments would flow offshore.

The government has said it expects 85-90% of the companies to be New Zealand-owned, including its 51% stakes, but this will not be controlled for in legislation to go through Parliament allowing the partial sales of Mighty River Power, Genesis Energy, Meridian Energy and Solid Energy.

English yesterday said that when selling shares in Mighty River Power - the first of the companies to be partially privatised - the government needed to make sure it maintained interest from a number of bidders, as it had to keep in mind the following three floats. Government has received interest from Iwi, KiwiSaver providers and 'mum and dad' New Zealand investors, while there is also interest from prospective foreign buyers for shares in the companies.

The government will set a 10% ownership cap on any one investor in any one company.

English told interest.co.nz the government had already made it clear there would be no 'on-sell' restrictions. He made a comment to Parliament's Finance and Expenditure Select Committee yesterday that the government was "not going to try and control the market" of shares once they were sold off.

English confirmed to interest.co.nz that this did not indicate in any way the government was leaning away from the possibility of having investor loyalty schemes for shares issued initially in the companies.

As well as selling up to 49% stakes in Mighty River Power, Genesis, Meridian, and Solid Energy, the government will also sell down its three-quarter holding in Air New Zealand to no less than 51%, in a bid to raise NZ$5-7 billion for new capital spending over the next five Budgets.

It has already allocated NZ$1.48 billion of this spending, consisting of a NZ$1 billion investment in schools, NZ$400 million on irrigation, and NZ$80 million on a high-tech centre in Auckland.

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22 Comments

by Asher | 22nd Mar 12, 5:31pm 1332390713

Hi Alex,

Do you know what proportion of the top say 20 companies on the NZX is currently NZ owned? Could also be worth considering formerly listed companies that were taken over and exported eg. Lion. Interesting to know whether the Governments stated 85-90% is realistic, optimistic or blatant lies. Either way without restrictions it is misleading for them to state it at all. Just keeps adding to that devastatingly ugly chart which Bernard shows of our GDP going overseas as dividends and interest payments to foreigners.

Heres another opportunity guys come and suck us dry, we are stupid enough to vote for an investment banker? What did we expect, that the 99% would be better off?

by Asher | 22nd Mar 12, 7:03pm 1332396211

Lies Lies Lies. Just did a quick and dirty and National dont have a leg to stand on.

Telecom is at least 72% overseas owned (and I only checked the top 78% of shareholdings) so much so that if you read its annual report the overseas investment act considers it to be a foreign person (Chorus alike).

Fletcher Buildings annual report states it is 68.66% NZ owned, however 44% of its supposed NZ owned shares are only held in a custodial sense by the RBNZ. At least 30% of the 44% held by the RBNZ have foreign interests making Fletcher at least 62% foreign owned.

If 80% of our top 15 companies (which Fletcher, Telecom & Chorus represent) are at least 60% overseas owned how can the government expect our soon to be floated SOEs to retain a 70% local ownership of the freely floating shares (ie. excluding the govt. 51%).

by powerdownkiwi | 22nd Mar 12, 7:58pm 1332399505

We're talking serious false pretences here. This Govt is gonna do it hard. Even our crummy media are gonna start raising the ante, at this rate.

Callous arrogance, to be putin it mildly.

Mind you, it'll be a near-run thing whether the real GFC happens befoe the first float, and there won't be a second.

by steven | 22nd Mar 12, 11:15pm 1332411326

Pity it isnt Air NZ as the first.....worthless it will be....

Canning the asset sales could be one good outcome of the proper GFC....

regards

by powerdownkiwi | 22nd Mar 12, 9:15pm 1332404102

We won't buy it back. We'll just take it. Globalisation is toast. The fiscal ponzi is toast. By the time it falls out, whether they own shares in a distant dam will be the least of their immediate worries, and we'll be electing whoever promises total reposession.

That may sound harsh, but this is privatisation of the commons, you have to answer in kind.

by steven | 22nd Mar 12, 11:11pm 1332411088

yep.....the only Q is how far off is it....10 years? 20? I think we will see 5 or 6 years of a drop to the bottom something like Russia where they lost 25% of GDP in a year.....10% per annum seems certain....After that well what value is there? ie it may well be that such foreign owners simply walk away or disappear by going bankrupt....once globalisation goes then so does much of the value and substance of such companies. What can they do export bags of NZD?....they will be insolvent.

Sadly I dont see any sign in this entire crop of Pollies of the capability to deal with Peak oil....they cant even see/say it.....

regards

by steven | 22nd Mar 12, 11:11pm 1332411090

Sadly I dont see any sign in this entire crop of Pollies of the capability to deal with Peak oil....they cant even see/say it.....

regards

by speckles | 23rd Mar 12, 7:35am 1332441316

That's the whole point you really have no idea when. I do take from your comments on Air NZ above it appears for your personal gratification the sooner the better. The one consistent in your post is no concern or empathy for people and the consequences.

by powerdownkiwi | 23rd Mar 12, 7:48am 1332442114

speckles - you raise an interesting point.

I was on a panel discussion with Nicole Foss, the other night

http://www.odt.co.nz/news/dunedin/201713/integrated-thinker-speaking-tour

where that question was raised: The query was about pensioners/beneficiaries, but it could have equally been about investors.

I grabbed the mike; pointed out that we inhabit a planet capable of supporting perhaps 2 billion people long-term - if subsistence is what you want. If, however, you want to live at our current level, the figure is more likely 1 billion. There are currently 7 billion here - making worries about pensions, investment incomes, so irrelevant as to be well into denial (or total ignorance) territory.

I have a degree of empathy - almost all of my time is spent doing voluntary work - but I'm not volunteering to remove myself until the body gives out :)

by speckles | 23rd Mar 12, 8:04am 1332443058

PDK I understand your points completely and the comment was not directed at you unless Steven is you alter ego. Any links on timelines would be appreciated. I have my affairs in order and help others although the better the knowedge, the better I can plan to make an effective contribution. The point is in life and opportunities, it is never over until is it over.

by powerdownkiwi | 23rd Mar 12, 8:34am 1332444856

Cheers - didn't think it was... paranoia I only do betweem 10 and 10.01 on the thirteenth, every second month. :)

One of the best is this;

http://dieoff.org/page25.htm

Which I've linked here more than once. The second graph down. Also Tom Murphy's blog 'do the math' is worth reading, every word. Go see Nicole Foss, too. She's doing a workshop in Chch (you won't seeHugh there!) and working north.

The problem is in reading the down-side, while trying to see what will happen to the way we transact with each other during the descent. That gaussian is assuming a continued attemt at growth - but if the fiscal system is in tatters, maybe growth is too. For example, globalisation (i.e. the silly, temporary shifting of bottled-water to France from Canada, and from Canada to France simultaneously) will reduce exponentially - can't not. On the other side, as Greece proves, people will chop down the last trees for winter firewood, regardless of having dropped out of the system. (the Greenland Norse did that too - Jared Diamond is a good read).

Best pick would be this: A fiscal recession/depression, playing out over five years. By that time, peak energy flows (both total and per-capita) are well in the rear-view mirror. Maybe there will be a dead-cat 'recovery', short and low, maybe a couple of echoes. My pick is that by 2020, globalisation is gone, we've dismantled much of out untenable legislation (the building regs can't survive the practical need to survive, for instance, and the food bill is unenforceable in the face of humger) and there has probably been - or is being - a major global war over resources. Dying empire (USA) vs rising empire (China) is my guess -affiliations a question-mark.

Anyone with a mortgage still running in 2020, I expect will be reposessed - the in-the-know absolutely realise that something tangible is more valuable than something intangible.

Maintaining community will be important - cheap energy was what allowed us to be competing individuals - and the kind of politicians we elect might be more like team leaders than lobby agents.

Want the long version?

by speckles | 23rd Mar 12, 9:46am 1332449184

Thanks PDK, I don't mind the long version however BH may object, can't let you outdo Ian now can we.

by steven | 23rd Mar 12, 9:56am 1332449762

Not sure on the global war.....wars will take too much energy and use one time available units.

Consider that Japan near the end of the war couldnt put Battleships to sea or much else.....I think for the Yamato it emptied other capital ships tanks for a one way ride......it was also unescorted....there was no fuel to spare.

Or Germany they had possession of a big refinery in Czechoslovakia, when the allied troops got there it was bombed out.....no production....

So any wars will be pretty short I think, not much more than a few battles, what does the winner get? a bomb hole probably.....we could go nuclear and taht is a real risk as the losers say "f*** you all" in which case bye bye....

The idea of reposessions is interesting....given the present meltdown Im not so sure that these wont happen before this decade is out....but, what is the point? so the bank that finally ends up with your mortgage could take posssession and then be liable for rates etc. really all they would own is a bit of land that has no income. It would be a drain they couldnt sustain as most housing is too dense to be really worthwhile owning.....lifestyle blocks with good land and water on the other hand, yes definately...

I hope it isnt too bad out to 2020...by then my children will be grown and educated and have a decent chance....I dont expect to be around mind....no drugs, no me.

regards

by martinv | 23rd Mar 12, 10:51am 1332453096

At the Christchurch polytech tonight, Friday 23rd, 6-9pm, Nicole Foss from The Automatic Earth. Hope to see you all there!

... update, in room L202 upstairs, but may move to Imagitech theatre A134 if lots of people.

by steven | 23rd Mar 12, 9:24am 1332447882

If you look at the fundimentals, energy limits is THE fundimental....however human ingenuity to prolong the inevitable is quite powerful. The next one is population, too many of us to feed without oil...

Consider that we have 7billion and that was achieved with the conversion of fossil fuels to food for the last 50 years. As that fossil fuel becomes expensive and even scarce there will be a reduction in population and it will fall a long way, easily under 2 billion. This isnt me wanting it, its looking at the inevitable....so the Q is how to soften the change and minimise the hardship and misery.....however ppl are determined not to adjust......so when it does happen it will be far worse than it needed to be.

regards

by speckles | 23rd Mar 12, 9:57am 1332449836

OMG didn't know you had it in you.

"...so the Q is how to soften the change and minimise the hardship and misery.."

so why not focus on that then. If you think currently Air NZ is about a few employees, tourism and some retail jobs currently then I do not think you understand the strategic significance and linkages to the current set up of our exporting and business. Wishing it to be the next airline to fail as in you earlier comment will not help... "soften the change and minimise the hardship and misery"

ps. I do not work with or have any interests/investmentsin the airline industry.

by Alex13 | 23rd Mar 12, 9:59am 1332449953

"If you look at the fundimentals, energy limits is THE fundimental...."

Is this a description of a pessimist’s brain? (Fundi: the portion of a hollow organ opposite or farthest from its opening)

by steven | 23rd Mar 12, 10:12am 1332450778

Oh dear, fear coming through? Everywhere you look throughout history energy has been the driving force, or limit.....now I can understand you have no idea on math, physics and engineering....and you just proved it again....

Really blind faith in a something technological or whatever to make it all go away in the face of the unstoppable when told by the ppl who do tech it isnt going to happen is the view of a fundi/extremist.

regards.

by steven | 23rd Mar 12, 9:16am 1332447378

No......on many levels....yet more shooting the messenger. This is about triage....no personal gratification, actual distress because ppl are wasting their lives. Pouring tax money into a dead duck that cannot be saved is pointless and that is my concern moving forward.....we will only have so much money, so we have to decide what is essential and what isnt....So if private investors think they can make money on Air NZ why not let them?

When is pretty close, inside this decade, in terms of planning its tomorrow. Consider if you have a 25 year mortgage, what are your options?

I have a lot of concern for ppl, just I dont take a small group of ppl such as Air NZ employees as a priority compared to NZers as a whole......

We look at things like say the flax industry, it was superceeded with new materials....you cannot support the un-supportable.

Consquences are that we have used the easy oil but done nothing to prepare for tougher times.....ppl who work in industries like Air NZ, tourism and retail are going bye bye....that is a sad fact.

regards

by steven | 22nd Mar 12, 11:03pm 1332410587

Right now we see concerns over a land grab both farms and companies....however these grabs are only viable as long as,

a) We as voters and hence a Nation tolerate it, For instance Argentina I think put export duties on beef despite the protests, India and Thailand stopped the export of rice....those govns I think recognised their options were but one, stop exports or get kicked out.

b) Globalisation exists....once it goes and I wonder if it has 20 years to run then we as a nation will re-poses the items, either by simply nationalising them or because they have been abandoned by their owners.

The assets sales look like a vote loser, I would be very surprised if Key even bothers to mention selling a controlling stake.....

I concur on the Green's despite the fact Im a Green party member, though actually the more radical ones like Locke etc are gone (and good riddence you cant be green and red, the mix is just a nasty brown) I wouldnt want a Green Govn....but I do want a green tinge.....to the Govn......

One thing on foreign ownership with a CGT they now get taxed....and that will come, the only Q is 2014 or 2017.....

GST and the tax cuts I think have done more damage than good.....the effects on new building etc would seem tset to bite.....but there you go, ppl wanted more $s in their pockets......

regards

by Chris-M | 23rd Mar 12, 11:57am 1332457024

How do we get rid of this guy?

We may not be able to get rid of him easily for about 3 years, but we can all sign the up coming petition calling for a citzens initiated referendum oposing the sales. On past form, he may well try fudge arround and ignore public opinion thus expressed, but the electoral consequences would have to be significant (given oposing public opinion is running at 80%) and hopefully the other National MP's well toss him out.

by Earthling | 23rd Mar 12, 7:08am 1332439720

Approximately 350 million shares in Chorus have been traded since it listed on November 23. This represents about 90% of the 385 million shares on issue. They might have been bought by anybody - just as the shares in our power companies might be.