Mighty River Loyalty Share Plan Costs NZ$40 Mln, English Says
The actual cost will depend on how many citizens buy shares at the initial public offering that opens next week, and how many hold them for two years, English told Television New Zealand. Investors who retain their stock will get a 1-for-25 bonus, capped at 200 shares, according to offer documents made public April 5.
The government is offering as many as 686 million shares, or 49 percent of Mighty River, and could raise at least NZ$1.6 billion, based on an indicative price range of NZ$2.35 to NZ$2.80 a share, it said. It will hold back shares from the initial sale to issue under the bonus plan, ensuring it retains a 51 percent stake.
“It’s a balance between making sure we get the most value we can for a taxpayer asset, and achieving something everyone wants to achieve and that is New Zealanders as long term owners of this company,” English said.
There were 440,000 pre-registrations of interest in the offer which signals “fairly strong demand” although it is likely some of those people won’t buy shares because of what they read about the risks to the company’s outlook, he said.
“There will be some who thought there weren’t any risks related to Mighty River because it was government owned,” he said. “In fact it faces the same commercial risks as any privately owned power company, and there are plenty who invest in Contact Energy or Trustpower that face similar risks.”
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