Selling of Lyttelton Port Company?
Christchurch City Council Pressing On With Selling Lyttelton Port Company?
Quiet & Ominous Moves Behind The Scenes
The Keep Our Port Public (KOPP) coalition notes with alarm the fact that Christchurch City Holdings Ltd (CCHL), holding company for the Christchurch City Council's trading assets, has been quietly buying up shares in the Lyttelton Port Company (LPC) and has passed the significant mark of 75% ownership.
To quote the City Council's own Website (where this increased shareholding is an agenda item for next week): "In terms of the Companies Act a 75% shareholding enables a shareholder to control any special resolution of the company and while there are limited occasions when special resolutions are needed they are always to do with major transactions or issues and in these circumstances CCHL and the Council need to be certain that their substantial shareholding can be used effectively".
In 2006, out of the blue, the City Council via CCHL moved to buy 100% of Lyttelton Port Company's shares and then sell 50% of it to Hutchison Port Holdings Ltd of Hong Kong. By law they needed to get 90% of the shares to force the other 10% to be compulsorily acquired. Public opposition (of which KOPP was proud to be an active part) made that look unlikely, so they lowered their target to 75% (whereby a "scheme of arrangement", often a merger, can be done with the consent of 75% of the shareholders, without requiring the agreement of the remaining shareholders). Of course, in 2006, the City Council's plan was thwarted by Port of Otago buying a blocking stake in LPC which left CCHL just short of the magic 75%. Hutchison took its bat and ball and went elsewhere.
Now that, two years later, CCHL has reached the 75% ownership mark, the question to ask is: what is going on behind the scenes? Is there another would be transnational buyer waiting in the wings to snap up LPC? If so, who is it? The processes are now in place to enable the City Council via CCHL to sell our publicly owned port company. The public of Christchurch and surrounds, the owners, are entitled to answers from the City Council and CCHL. What's the story?
We very specifically call upon those Councillors and Community Board members who signed the Public Ownership Pledge during the 2007 local body election campaign - see http://canterbury.cyberplace.co.nz/community/CAFCA/publications/Miscellane ou s/pop.html - to give this issue their highest priority.
As to why selling LPC into private ownership, whether foreign or New Zealand, is a bad thing, the best succinct summary is in the April 2006 joint statement by a number of local Ministers and Government MPs:
"We have serious concerns about both the process and the potential outcome of the proposed sale into the private sector of the majority shareholding in the operational arm of the Lyttelton Port Company. In holding these serious concerns we also believe that the current competitive situation and price gouging actions of New Zealand Ports is unsustainable in the longer term.
"The current situation, which is a direct result of the so-called 'Shipping Reforms' of the 1990s, leaves all New Zealand Ports vulnerable to the whims of the Shipping Companies. These reforms have also resulted in New Zealand Ports competing against each other, and often price gouging in order to attract business. This pricing regime is not sustainable, which will mean that some of our Ports will fold.
"One alternative to this current unsustainable situation is indeed that proposed by Christchurch Holdings. Their proposal could possibly give Lyttelton a competitive advantage over other New Zealand Ports and could strength Lyttelton Port. But it may be at the cost of current employment security and involves the loss of a public asset.
"A stronger and more competitive Lyttelton Port, with protected employment security, could be achieved in another way; by much closer collaboration between New Zealand Ports. New Zealand Port companies need to get a strong message that they cannot continue to compete if they want to survive. Port reform needs to move to another stage where New Zealand Ports collaborate to compete internationally. So - we have two messages:
"The first is that that we cannot continue as we are and expect all New Zealand Ports to survive. We have to collaborate to compete internationally. The second message is the sale of the operational arm of the Lyttelton Port Company is not the only option or the best option, and therefore it should not be supported. It is the sale of a strategic asset and it should be kept in public ownership in New Zealand".
That says it all.