New Zealand Prime Minister John Key said he still expects to get NZ$5 billion ($4.1 billion) from selling shares in state companies as he completes a program of asset sales before next year’s general election.
The forecast proceeds are at the low end of Key’s original NZ$5 billion to NZ$7 billion target after Solid Energy New Zealand Ltd. required a restructure and Meridian Energy Ltd. had to write down the value of its assets.
“Not having Solid Energy and being able to take that to the market makes life a little bit trickier for us, so it’s more likely to be at the lower end,” Key said at a news conference in Wellington today, adding he is “reasonably confident” of hitting the NZ$5 billion target.
Key has pledged to sell stakes in the companies to pay for new infrastructure spending and reduce debt. In May, the government raised NZ$1.7 billion from the sale of 48 percent of Mighty River Power Ltd., and it said today that offer documents documents for the sale of as much as 49 percent of Meridian Energy Ltd., the nation’s biggest power company, will be lodged on Sept. 20.
An offer of shares in Genesis Energy Ltd. will be made in the first half of next year, and the sale of shares in Air New Zealand Ltd. will occur before the election, which is expected in the fourth quarter of 2014, Key said, adding he couldn’t rule out a sale this year.
Meridian’s share offer will be open from Sept. 30 after regulators review the offer document, State-owned Enterprises Minister Tony Ryall said. The shares will start trading on the New Zealand and Australian stock exchanges on Oct. 29 after final pricing is agreed, he said.
The government will offer Meridian shares as installment receipts, allowing investors to pay about 60 percent of the cost up front and the remainder in 2015. An indicative price range will be included in the offer documents, as will a share price cap for New Zealand individual investors. The cap may be less than the IPO price set by institutions.
The offer closes Oct. 18 and will be followed by an institutional book build.