Gordon Campbell | Parliament TV | Parliament Today | Video | Questions Of the Day | Search

 


Meridian Energy share offer details confirmed

20 August 2013

Meridian Energy share offer details confirmed

The Government today confirmed it would use instalment receipts in the Meridian Energy share offer – allowing investors to pay for their shares in two instalments.

Subject to market conditions, the sale of up to 49 per cent of Meridian is expected to be completed, and the company listed on the sharemarket, by early November, Finance Minister Bill English and State-Owned Enterprises Minister Tony Ryall say.

“Listing up to 49 per cent of Meridian on the sharemarket will give New Zealanders an opportunity to invest in another big Kiwi company at a time when many people recognise the value of diversifying their growing savings away from property and bank deposits,” Mr English says.

The instalment receipts, which are fairly common for major initial public offerings in other countries, will mean New Zealand retail investors will need to pay less cash up front when they apply to buy shares. Instalment receipts were used by the Government in the float of Capital Properties in 1998.

“They will allow New Zealanders to pay for their shares in two instalments,” Mr English says. “The first instalment, for around 60 per cent of the share price, will be paid when investors apply for shares.

“The remaining amount, which will be fixed at the end of the share offer, will not need to be paid for a further 18 months.”

Between the first and second instalments, investors will receive the full dividends paid out in that period, which will make the dividend yield – or return on their investment – higher in those first 18 months.

Ministers have decided to use the instalment receipts as an incentive for New Zealand investors in Meridian, instead of the loyalty bonus shares that were used in the previous Mighty River Power share offer.

Mr Ryall says ministers have also confirmed the following decisions for the Meridian share offer:

A minimum application of $1,000 will apply for the first instalment of shares.
Given there is sufficient public familiarity with the Government's share offer programme, there will not be a formal pre-registration process, as happened with the Mighty River Power offer.
Retail banks ASB and ANZ and sharebroker Forsyth Barr have been appointed to the retail syndicate for the Meridian offer. The syndicate will work closely with joint lead managers Craigs Investment Partners / Deutsche Bank, Goldman Sachs /JB Were and Macquarie to market the offer to New Zealanders.

“Another difference with the Meridian offer is that we have decided to set a share price cap for New Zealand retail investors who take part in the offer,” Mr Ryall says.

“We understand that people like to know the maximum price they’ll be paying at the time they apply to buy their shares.

“Therefore, the cap will be set at the same time that we set the price range, and it will be announced when we lodge the offer document. This will give retail investors more certainty when they apply for shares.

“It also means that if demand is such that institutions are bidding at higher prices than our price cap, then retail investors will get their shares at a lower price than that paid by the institutions.”

Information about the Meridian offer, including how instalment receipts work, is available for New Zealanders on the Government Share Offers website (www.governmentshareoffers.govt.nz). The offer document will provide prospective investors with all of the information they need about Meridian and the offer structure.

Media contacts: Craig Howie 027 7555 809, Joanne Black 021 675 820, Jackie Maher 021 243 7803

Important information

The Crown is considering offering shares to the public in Meridian Energy Limited (“Meridian”) and is seeking indications of interest. No money is currently being sought and no applications for shares or instalment receipts will be accepted or money received until after an investment statement containing information about the offer is available (the “Offer Document”).

It is intended that an application be made to NZX Limited ("NZX") for permission to list Meridian, and to quote initially the instalment receipts and then later Meridian's shares on the NZX Main Board. The application will be made closer to the time that the shares in Meridian are offered to the public. No such application has yet been made.

Not for distribution or release in the United States.

This media statement is not an offer of securities. The securities referred to in this media statement have not been and will not be registered under the U.S. Securities Act of 1933 and may not be offered in the United States except in transactions that are exempt from or not subject to the registration requirements of the U.S. Securities Act and other applicable securities laws.

MERIDIAN SHARE OFFER

Instalment Receipts Q&A

What is proposed?

Investors will pay for shares in two stages; an initial part payment when the application for shares is made and the remaining final payment after 18 months. An instalment payment option allows investors to get a higher percentage return (or dividend yield) on their invested money for the instalment period (18 months).

Why are you using instalment receipts?

There are a number of reasons. Meridian is a large company – significantly bigger than Mighty River Power – and because we are committed to meeting our objective of 85-90% New Zealand ownership, allowing New Zealanders to purchase shares in two instalments is a sensible option. We also believe it creates an incentive for investors, given the enhanced yield it offers in the first 18 months.

What are the benefits of paying in instalments?

An investor receives a higher return on the investment during the instalment period because he or she has only partially paid for the shares yet still receives full dividend returns. In addition to dividend payments, investors retain the other benefits of an ordinary share, such as the ability to cast a shareholder vote and the option to sell the instalment receipts.

What is an instalment receipt?

At the conclusion of the share offer investors are issued a receipt for every share they partially pay for. These are called instalment receipts. These receipts work like ordinary shares. They will be traded on the NZX Main Board and they register the owner as the full beneficiary of any dividend payments and shareholder rights. When the final instalment payment is paid, the instalment receipts are cancelled and the investor receives ordinary Meridian shares.

Can the instalment receipts be sold during the instalment period?

The instalment receipts (which represent the shares that have been have partially paid for) can be sold during the 18 month instalment period. If this occurs, the person who buys them becomes the beneficiary owner of the entitlements and responsible for the final instalment payment.

If an investor decides to sell their instalment receipts, what price will they get?

The instalment receipts will be traded on the NZX, so an investor will get the price that the instalment receipts are valued at (by the market) at the time of sale. The price will reflect the value of a share that is only partially paid for.

How do investors know how much the instalment payments will be?

The first instalment payment is fixed at a set price per share outlined in the offer document. The second payment is set at a fixed price per share at the conclusion of the share offer. Ministers have confirmed that the price for the second instalment will be capped for New Zealand retail investors, and this will be disclosed in the offer document.

Does the second instalment payment change if the share price changes after listing?

No. The second payment does not change if the company’s trading price goes up or down. The remaining payment is a fixed price per share that will be set at the conclusion of the share offer.

Who administers the instalment receipts?

A trustee will be appointed to administer and protect investors’ rights to shares represented by instalment receipts and instalment receipt holders will receive dividends, notices of meetings and invitations to attend meetings as if they were shareholders.

Are there any risks that a future Government could cancel the second instalment?

The Trustee will have a contractual obligation under the Trust Deed to transfer the shares to investors on payment of the final instalment.

What happens if an investor doesn’t pay the second/final instalment payment?

If the final instalment payment is not paid, an investor’s right to receive ordinary Meridian shares is forfeited and the Trustee may sell the shares on the investor’s behalf. If the sale of the shares returns more than the outstanding payment, the investor receive the surplus proceeds (less fees and charges). If the sale returns less than the outstanding payment, the investor remains liable for the payment shortfall (plus any fees and charges).

What dividends can be expected between the instalment payments?

It is expected that Meridian will pay three dividend payments during the 18 month instalment period. These would be at six months, twelve months and 18 months.

How will investors know what the underlying returns (dividend yield) are likely to be?

Instalment payments provide an elevated dividend yield (percentage return on an investment) over the instalment period. The Offer Document will clearly outline the instalment period’s enhanced dividend yield and Meridian’s underlying dividend yield. The underlying dividend yield represents the return on the investment if the investor had been required to pay the full share price up-front.

Are there tax implications?
Imputation credits attaching to a dividend paid by Meridian are able to be passed through to and utilised by the instalment receipt holder. After the final payment is made and ordinary shares are received, this is not likely to trigger a capital gains tax event for the holder.

Important information

The Crown is considering offering shares to the public in Meridian Energy Limited (“Meridian”) and is seeking indications of interest. No money is currently being sought and no applications for shares or instalment receipts will be accepted or money received until after an investment statement containing information about the offer is available (the “Offer Document”).

It is intended that an application be made to NZX Limited ("NZX") for permission to list Meridian, and to quote initially the instalment receipts and then later Meridian's shares on the NZX Main Board. The application will be made closer to the time that the shares in Meridian are offered to the public. No such application has yet been made.
ends

© Scoop Media

 
 
 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On The Tokenism Of New Zealand's Role Against Islamic State

To date, the Opposition has continued to occupy itself with the marginalia of the issue. E.g. whether Key did or didn’t know whether Barack Obama would be present at the US briefing last week on IS, or whether New Zealand’s military involvement is or isn’t already a fait accompli.

It might be better to tackle the issue, head on. Our contribution against IS will be to send SAS forces to train the Iraqis? That’s like offering trainers to General Custer just as the 7th cavalry reached the Little Big Horn.
More>>

 

Parliament Today:

Scoop Business: Shell And Todd Caught Drilling Without Approval

Multi-national oil company Shell’s New Zealand arm and local energy giant Todd Energy have breached the new law governing New Zealand’s Exclusive Economic Zone, the Environmental Protection Authority says in an Oct. 10 document released by the Green Party. More>>

ALSO:

Labour: Tea Breaks 'Gone By Lunch Time'

“How cynical that on the eve of Labour weekend, the National government is pushing through legislation that takes away the statutory right to tea and meal breaks along with collective bargaining protections, and makes vulnerable workers jobs even less secure." More>>

ALSO:

Gordon Campbell: On Pharmac, Gough Whitlam And Sleater-Kinney

We’re not at the outset of these negotiations. The outset was six years ago, and negotiators were hoping to have some sort of ‘framework’ deal finished in time for the APEC meeting in a few weeks’ time. These ‘extreme’ positions are what we’ve reached near the intended end of the negotiations… More>>

ALSO:

PM Of Many Hats: Questions, No Answers On Whale Oil

Dr RUSSEL NORMAN (Co-Leader – Green) to the Prime Minister: How many times since November 2008 has he spoken with blogger Cameron Slater on the phone and how many times, if any, has he texted him?
Rt Hon JOHN KEY (Prime Minister): None in my capacity as Prime Minister. More>>

ALSO:

Aussie Investigation Dropped: Call On Minister McCully To Pursue The Case Of Balibo Five

West Papua Action is deeply concerned at the lack of any clear outcome from the Australian Federal Police inquiry into the 1975 deaths of the ‘Balibo Five’ including NZ journalist Gary Cunningham. More>>

ALSO:

'Feed The Kids' Bill: Metiria Turei To Lead Fight On Feeding Hungry Children

Green Party Co-leader Metiria Turei is urging all political parties to support the Feed the Kids Bill which she inherited today from Mana leader Hone Harawira. More>>

ALSO:

Parliament Today: State Opening Of Parliament

The House sat at 10.30am on Tuesday before MPs were summoned to hear the Speech from the Throne in the Legislative Council Chamber. More>>

ALSO:

Tertiary Education: Students Doing It Tough As Fees Rise Again

The Government is making it increasingly difficult for Kiwis to gain tertiary education as fees continue to rise and access to student support becomes even more restricted, Labour’s Tertiary Education spokesperson Chris Hipkins says. More>>

ALSO:

Housing, Iraq: PM Press Conference – 20 October 2014

Prime Minister John Key met with press today to discuss:
• Housing prices and redevelopment in Auckland
• Discussions with Tony Abbott on the governmental response to ISIS, and New Zealand’s election to the UN Security Council More>>

ALSO:

Get More From Scoop

 

LATEST HEADLINES

 
 
 
 
 
 
 
 
Parliament
Search Scoop  
 
 
Powered by Vodafone
NZ independent news