Meridian Fire Sale a $1b Hole In Asset Sales

Meridian is being sold off in a fire sale for $1b less than the $3.1 billion the Government needs to reach its hopelessly optimistic goal of raising $5b to $7b from asset sales, says Labour’s SOEs spokesperson Clayton Cosgrove.

“The Government’s asset sales plan is under crisis management. With Meridian now set to raise $1b less than expected the Government hasn’t got a hope of raising the money it promised Kiwis it would.

“The share price is only $1.50 - $1.80, much lower than the $2.50 for Mighty River Power shares. Given that just half the people who wanted to buy Mighty River shares want to buy into Meridian, it’s no surprise the price is so low[1].

“This is a fire sale, pure and simple.

“The reason for the low price is that Mighty River shares have substantially decreased in value. The Government can’t risk the same thing happening to Meridian, so they set the price as low as possible.

“The Government was warned by companies such as Macquarie and Forsyth Barr that the price for Meridian would be far lower than expected. They should have called off the sale then.

“The Suzanne Paul-style buy now, pay later scheme will cost at least $40 million.

“The sharemarket is sending a clear signal. It doesn’t have the appetite for more electricity companies.

“The Government is ignoring investors, bankers and the 327,000 people who called for a referendum. They will reject the referendum too.

“Not only is John Key out of touch with the public, he’s even out of touch with his finance mates. Just who is the Prime Minister in touch with these days?

“The asset sales programme is pure ideology and is seriously flawed economically. John Key and Bill English need to take a deep breath, realise that the asset sales programme has failed and put it out of its misery,” says Clayton Cosgrove.

ENDS

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