Northland Regional Cl Considers POA Shares
Northland Regional Council Considers $24 Million Share Sale To Ports Of Auckland Ltd
Securing a strategic ally to improve Northland’s inadequate infrastructure is among a host of potential benefits from the possible sale of a $24 million stake in the Northland Port Corporation to Ports of Auckland Limited.
The Northland Regional Council – which currently has a majority 72.3% shareholding in the Port Corporation – is seeking the public’s backing to sell a 19.9% stake in the corporation to its nearest neighbouring port in a deal worth an estimated $24 million.
The Council will tomorrow (Fri 12 Nov) begin a one-month period for public submissions on the proposal, with its Chairman, Mark Farnsworth, giving an assurance that a sale is by no means a “done deal”.
“Councillors will be guided by the public’s views when making a decision and importantly, even if a sale does go ahead, the NRC would still retain a majority 52.4% shareholding in the corporation, which in turn owns 50% of Marsden Pt deepwater port operator Northport Limited.”
Mr Farnsworth says among key factors driving the sale proposal are the considerable strategic and financial benefits it offers Northland, including a heavyweight ally in Northland’s ongoing efforts to improve its roading, rail and other infrastructure.
Ports of Auckland Chairman Neville Darrow believes the deal would be a catalyst for a co-operative approach to port development in Northland.
“It would increase the likelihood of a planned and efficient development of trade through the two ports serving the Auckland and Northland regions, which already are home to more than 40% of New Zealand’s population.
“Ports are a long term business, and as time progresses the urban areas of Auckland and Northland will inevitably grow towards each other.”
Mr Darrow says in future, as more Northland produce is processed prior to export, container volumes shipped through Marsden Pt can be expected to increase “and this is an area where Ports of Auckland can certainly offer expertise”.
“The Port of Auckland is New Zealand’s largest container port, handling half of all North Island container movements,” Mr Darrow says. “A cornerstone stake by Ports of Auckland in Northland Port Corporation could be a catalyst for co-ordinated, long term planning targeted at producing the very best supply chain to get exports sourced from Auckland and Northland to market, and to get imports to the shop shelf.”
Mr Farnsworth says it is for these reasons that the NRC is considering a sale to Ports of Auckland, rather than the Port of Tauranga, which currently owns the other 50% of Marsden Pt port operator Northport.
He says Tauranga’s timber-related expertise made it a logical partner when the Port Corporation was looking to develop the Marsden Pt facility.
“However, with the successful development – and planned expansion – of the port, it’s now time to look to the future. The Council believes Ports of Auckland offers a strategic, broad focus able to facilitate the growth of both the port and the infrastructure required to support it.”
Mr Farnsworth says Ports of Auckland is also no stranger to Northland and is already a successful 50:50 partner with Northport in marine services company North Tugz.
Meanwhile, Mr Farnsworth says strategic benefits aside, the proposed sale would also provide welcome additional financial security for the Council, which currently has much of its $170M-plus overall investment portfolio (which also includes commercial property and forestry) tied up in the Port Corporation.
He says two independent reports over the past several years had recommended the Council diversify its investments to avoid continuing a situation where “a great many of its eggs are in one basket”.
If accepted, the proposed deal will see Ports of Auckland pay the NRC $2.90 a share, which an independent report commissioned by the Council has confirmed would represent a good return.
Mr Farnsworth says likely options for investing the proceeds include a conservative diversified managed investment portfolio, fixed interest bonds and/or commercial property.
However, in addition to the immediate multimillion-dollar proceeds of the sale, the Council is predicting it will earn $800,000 to $900,000 a year more than budgeted, money that would be used to offset rates.
If a 19.9% sale does occur, it will likely take effect within the next several months.
Copies of a Statement of Proposal about the deal are available from all Northland Regional Council offices. Written submissions close 5pm on Monday, 13 December.