Clayton Cosgrove
SOE Spokesperson

20 August 2013

The latest SOE sale trick: Buy now, pay later

John Key has wheeled out his latest SOE salesman patter of ‘buy now, pay later’, in a desperate attempt to convince the 86% of Kiwis who don’t like asset sales to buy shares in Meridian, says Labour’s SOEs spokesperson Clayton Cosgrove.

“In the Mighty River Power sell-off the deal was ‘buy 25, get one free’. Now John Key is trying the old used car salesman gag of ‘buy now, pay later’. When this trick fails, what’s next? A free set of steak knives? This guy will give you anything but it’s the taxpayer who pays.

“The detail on the buy now, pay later scheme is deliberately wafer thin. But it’s likely to be yet another cost to the taxpayer. The 40 per cent of shares that investors get 18 months to pay for will have to be held by the Government.

“The Government will hold onto hundreds of millions of dollars worth of shares while investors get dividend payments for shares they don’t own. Presumably this money will have to be borrowed or will they dip their fingers into the Future Investment Fund yet again?

“John Key promised New Zealanders that the money from asset sales would go into the Future Investment Fund to build schools and hospitals. Yet we know $40 million of that fund will pay for the free shares investors got from the Mighty River Power float.

“John Key is desperate to get Kiwis to buy shares. He knows that just 14 per cent of Kiwis have any interest in buying Meridian shares, which is half the number who wanted to buy into Mighty River. That’s because Mighty River’s share price is currently 30 cents lower than when it floated.

“Kiwis know a bad deal when they see one. Despite all John Key’s skills as a salesman, he knows the only way to get buyers for Meridian is to sell it at a low price.

“John Key needs to get Meridian sold, no matter what the cost. Treasury says the float will raise $3.1 billion, but latest valuations say it’s worth just $2.1 billion. The cost is $1 billion,” says Clayton Cosgrove.

ENDS

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