By Bernard Hickey
Prime Minister John Key has announced cabinet has given the final approval for the sale of 49% of the shares in Mighty River Power in an initial public offering by mid-May.
Key said pre-registration for investors would be open from tomorrow.
He said the pre-registation process would last for around 3 weeks until March 22.
The offer is expected to open in mid-April and run for 3 weeks, with a float most likely before the May 16 budget.
The share offer document would be available during that period. Details of a loyalty bonus would be announced before the offer period starts, Key said.
Key said retail investors would be able to subscribe for a minimum of NZ$1,000 of shares, with increments of NZ$100 above that. There would be no scaling back for retail investors up to NZ$2,000.
He said the government would release details of a loyalty bonus share scheme for individual investors closer to the time of the setting of the offer price range.
The government remained committed to putting New Zealanders at the front of the queue and having New Zealand ownership of between 85-90%.
Once the offer period closed an 'institutional book build' would take place where institutional investors placed their bids at various prices.
Ministers would then make a decision about the share pricing and how the offer would be allocated.
Key, SOE Minister Tony Ryall and Finance Minister Bill English declined to say how many retail investors were expected to pre-register or buy the shares, or what proporation of the shares they would receive. They said the Australian firm that ran the offer for Queensland Rail was managing the process and had assured the government it could cope with the likely volume of registrations and offers.
"The Mighty River Power share offer has been designed to achieve widespread New Zealand ownership," Key said.
"From the government's perspective it makes sense for New Zealanders to get access to information, register their interest and apply for Mighty River Power shares," he said.
Ryall said an advertising campaign on television, in newspapers and online would begin from tomorrow and cost up to NZ$1 million.
Those who wanted to pre-register could do so online or through an 0800 number until March 22. From mid April an offer document would be lodged with the Financial Markets Authority. The offer would be open for three weeks with applications from retail investors accompanied by full payment.
There would be a secondary listing on the Australian stock exchange, they said.
Pre-registration does not commit investors to buy the shares. It was only available to New Zealand residents with a valid IRD number, a valid New Zealand bank account number and a New Zealand address.
Labour reaction
Labour leader David Shearer said the sales programme would see millions of dollars go into the pockets of private and Australian investors.
"Kiwis are being asked to purchase what they already own. John Key says he’s committing to keeping 85 per cent in New Zealand hands, but to do that thousands of Kiwi families will have to spend at least $1,000," Shearer said.
“The assets will be listed on the Australian stock exchange and open to investment from overseas companies. John Key can’t explain how he is going to ensure that at least 70% of the shares go into the hands of New Zealanders, apart from spending $1 million on an advertising campaign," Shearer said.
“John Key’s plan will see the vast majority of New Zealanders lose their assets while wealthy private investors from overseas get to cash in. National is plowing ahead despite a great deal of uncertainty around this plan. Iwi may need compensation, there is concern around Tiwai Point hanging over the electricity sector, Solid Energy has collapsed and electricity demand is predicted to remain flat," said SOE spokesman Clayton Cosgrove.
“No time is a good time for asset sales. But to sell our assets in a flat electricity market is simply reckless. And who will be the loser in the end? New Zealand families and taxpayers,” Cosgrove said.
(Updated with more details, Labour reaction)
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