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Joint venture proposed for PrimePort; giant boost for port

Media Release – strictly embargoed until 3.15pm

13 August 2013

Joint venture proposed for PrimePort; giant boost for port

A Joint Venture proposed by Timaru District Council and Port of Tauranga will be a giant boost for PrimePort resulting in a secure future with increased container traffic, employment opportunities and improved financial benefits for the district.

Under the proposal, which first must undergo a month-long consultation process with Timaru district ratepayers, the Port of Tauranga would buy 21.43% of PrimePort’s shares from Timaru District Holdings Ltd, a wholly owned subsidiary of the Timaru District Council, and the 28.57% of shares that are held by a group of local investors who make up Port Industry Holdings Ltd.

PrimePort would maintain 100% ownership of all operational land and buildings at the port, along with all port infrastructure. It would still operate the trade and marine facilities while the Port of Tauranga (through a subsidiary) would purchase and operate the container handling assets of the port and would be offered a long-term lease of the North Mole, guaranteeing an income stream to PrimePort. Timaru District Holdings Limited would gain 100% ownership of investment properties surrounding the port.

The Mayor of Timaru, Janie Annear, said that this agreement, initially for 15 years with two further rights of renewal of 10 years, would secure the profitability of the port well into the future.

“After 18 years in local government, this is the most exciting proposal I have seen. Port of Tauranga is anticipating a significant increase in container volumes through Timaru, something PrimePort would be less likely to achieve on its own.

“The flow on effect could be an increase in investment into infrastructure, storage and other related services and opens possibilities for more jobs.

“Timaru District Holdings will acquire full ownership of investment land which will provide a more secure dividend stream than the Port alone was able to offer. Timaru District Holdings will receive net proceeds of approximately $2 million from this transaction, which will be used to pay down debt. There will be no immediate effect on Timaru District Council rates, but with an expected increased dividend from PrimePort and the investment properties, there is opportunity to offset future rate increases,” she said.

PrimePort is one of New Zealand’s smaller commercial ports and as such is at the vagaries of world trends. Container traffic through the port has decreased by two thirds over the last five years as the world container trade changes to larger capacity vessels and shipping companies look to rationalise port calls.

“The proposal reduces the Council’s risk due to leasing the container operation instead of operating in isolation in a volatile shipping market.”

Port of Tauranga is a world-class operation. It is the biggest container port in New Zealand and the most efficient in Australasia. It promises to bring expertise and a new vitality to the whole port that will benefit all residents and businesses.

“PrimePort Timaru is ideally placed for growth. The South Canterbury region delivered export growth of 4.4% last year, compared to the national average of 2.9%. The port is the South Island’s most centrally located port, with 75% of the population within 200km. The surrounding region represents the largest irrigated area of arable land in New Zealand. Clandeboye, the second largest dairy factory in the world, is on its doorstep, as is the largest wool scour in the Southern Hemisphere.

“This proposal also unlocks the potential for coastal shipping services to use PrimePort as a feeder port into Port of Tauranga with exports then moved on to larger ships for worldwide distribution,” she said.

Timaru District Holdings Ltd has recommended this proposal to the Timaru District Council.

Background Information

For background information and the financial details of the transaction, please download the Statement of Proposal on the Timaru District Council website (www.timaru.govt.nz).

ENDS

Timaru District Holdings Limited

Timaru District Holdings is a wholly owned subsidiary of Timaru District Council. It owns the Council’s investments in PrimePort Timaru Limited (71.4% shareholding currently), Alpine Energy Limited (47.5% shareholding), and Te Ana Whakairo Limited (21% shareholding). The company has five directors, three of whom are elected members of Timaru District Council and two external directors.

Consultation Process

Copies of the Statement of Proposal can be downloaded from the Timaru District Council website (www.timaru.govt.nz) or obtained through the Council offices and service centres or by phoning Council (03) 687 7200.

Having Your Say

Submissions on the proposal are welcome and can be made by:

• Writing a letter

• Using the submission form provided

• Email to submission@timdc.govt.nz

• By submitting your comments through the Council’s website at www.timaru.govt.nz.

Submissions open: 17 August 2013 and close on 17 September 2013

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