Council votes to progress minority share float of Napier Port

Wednesday, 19 December 2018

On Tuesday Napier Port released its results for the 2018 financial year, with new record set for after-tax profit of $17.6million.

Seven of nine Hawke's Bay Regional Councillors have voted to progress a minority share float in Napier Port.

Councillors Paul Bailey and Debbie Hewitt were the only ones to vote against the move at a council meeting on Wednesday.

Council chair Rex Graham said the majority of councillors agreed with the majority of submitters that a minority share float was the most effective way to secure the port's future.

The council voted to continue work on a minority share float on the condition that any float provided for local participation, and that an initial sale of between 33 - 45 per cent of the port would be floated.

The exact percentage to be sold would be determined following consideration of expert advice and would be based on the port's capital needs, and with the minimum initial offer size to support trading liquidity and long term share value

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This was different to the maximum of 49 per cent consulted upon.

The port has been 100 per cent publicly owned through the Hawke's Bay regional investment company, a subsidiary of the regional council, since 1989.

On Tuesday the port released its results for the 2018 financial year, with a new record for after-tax profit of $17.6million.

In October a public consultation document put forth options for financing the future development of the port, which due to a significant increase in both the number and size of cargo and cruise ships, can no longer keep up with demand. Forecasts indicate the cargo volume is likely to increase a further 26 per cent by 2028.

To finance a reduction in debt and make investments, the council sought to raise $86.6 million through selling a minority stake of 49 per cent in an initial public offering on the share market (IPO).

Council chair Rex Graham said any final decisions on a share offer will be made in the New Year following the completion of more detailed work.

He said the majority of councillors agreed with the majority of submitters that a minority share float was the most effective way to secure the port's future.

'Under this model, outside capital will fund the port's growth, but we will retain majority ownership and control of it. We will also avoid taking on significantly more debt to fund the port which would ultimately cost ratepayers.'

'This decision also seeks to balance the Council's desire to maintain prudent debt levels and balance sheet capacity in order to focus squarely on the increasingly urgent work of cleaning up and protecting our land, our waterways and our coastline and communities from the increasing impacts of climate change,' he said