3 September, 2012
Mighty River Power IPO to go ahead early next year
The Government will proceed with an initial public offering of up to 49 per cent of Mighty River Power in the period of March to June 2013, Prime Minister John Key says.
That would be followed in the latter part of the year by an IPO of up to 49 per cent in either Meridian or Genesis.
“The Government’s preference would have been for a share offer for Mighty River Power this year.
“However, after careful consideration ministers have decided to undertake a short period of consultation with iwi on the ‘shares plus’ concept raised in the Waitangi Tribunal’s interim report.
“Since receiving that report 10 days ago, much of the legal and official advice we have received has been around this concept,” Mr Key says.
In essence, ‘shares plus’ refers to the idea that certain Maori interests would be given particular rights and powers in relation to the company, above and beyond the rights of other shareholders.
Mr Key says that after careful consideration and discussion, the Government’s current view is that this idea should not be progressed. There are five main reasons for this view:
- It is not in the national interest for any group within Mighty River Power’s potential 49 per cent minority shareholding to be given such rights.
- Almost every form of redress to Maori that could be covered by ‘shares plus’ can be achieved in other ways.
- The remaining elements of ‘shares plus’ in relation to decision rights over management or strategic decisions would not be able to work in practice. To take one example, if some Maori shareholders had the ability to make decisions on strategic issues, under well-established law, those shareholders must act in the interests of the whole company and not simply as a representative of Maori.
- If the ‘shares plus’ concept existed it was likely to make the company less attractive to investors, which could be reflected in a lower sale price and therefore be to the detriment of taxpayers.
- Following consultation with iwi earlier this year, a careful and deliberate decision was made to ensure that the Crown’s obligations under the Treaty continue to rest with the Crown, not with the companies.
However, ministers have today decided that taking some time to talk about ‘shares plus’ with relevant iwi is the prudent thing to do. That means preparation for the Mighty River Power share offer will continue to proceed, but in the March to June window next year, rather than in 2012.
“The timeframe for the IPO does not alter our commitment to providing investment opportunities to New Zealanders through our share offer programme,” Mr Key says.
“It’s good for savers, because it opens up new opportunities to invest in large, local companies. It’s good for taxpayers because we expect to generate between $5 billion and $7 billion in proceeds, which will be invested in new public assets like modern school and hospitals. That’s money we don’t have to borrow from overseas lenders.”
Ministers accept that even after taking the extra period for consultation there remains a litigation risk, Mr Key says.
“Just last Friday the Attorney General received a letter from the Māori Council which made clear their intentions in that regard.
“The Māori Council has told Ministers that if the Government does not follow the Tribunal’s recommendations – which include a national hui on water rights – it will take the Government to the High Court to attempt to halt the partial sale of Mighty River Power.
“However, Ministers have considered and rejected the idea of a national hui, as we don’t believe it is the appropriate way forward.”
The Government’s position on water rights has been consistent and clear.
- In common law no-one owns water.
- Maori do have rights and interests in water that are being addressed, and will continue to be addressed, through the Treaty process when dealing with historical claims and by other mechanisms, iwi by iwi.
- The partial sale of Mighty River Power does not impact on the Crown’s ability to recognise Maori rights and interests in water.
“The preferred focus is to develop models for the control and management of water that reflect relevant Maori interests. We already have those processes in train, through dialogue with iwi leaders and through the Government’s Fresh Start for Fresh Water process,” Mr Key says.
“Accordingly, we will be outlining our position to the Māori Council.
Mr Key says the issue is not about the Government against Māori, or Māori against Government.
“Within Maoridom there are a number of views on this issue – there is no one voice.”
Ministers consider that the Crown would be in a very strong position should legal action go ahead. If it was to occur, the Government expected it to happen sooner rather than later.
In the meantime, work on the various elements of the share offer was well underway, Mr Key says. That work would continue.
The Crown is considering offering shares to the public in one or more of Genesis Power Limited, Meridian Energy Limited, Mighty River Power Limited, Solid Energy New Zealand Limited and Air New Zealand Limited. No money is currently being sought and no applications for shares will be accepted or money received until after an investment statement containing information about the relevant offer of shares is available.