Regional Council confirms Napier Port IPO
29 May 2019
Regional Council confirms Napier Port IPO, subject to pricing and market conditions
Hawke’s Bay Regional Council today confirmed that it would proceed with a minority IPO of Napier Port subject to a final decision on pricing and market conditions, which would be made in June.
Regional Council Chair, Rex Graham, said rigorous work and due diligence has confirmed that a minority IPO can meet the Regional Council’s objectives and satisfy the terms upon which the Council consulted the Hawke’s Bay community.
“We have agreed today that a 45 per cent IPO of Napier Port will deliver the funds needed to enable the Port to invest in its future growth, while protecting ratepayers from the costs, diversifying the Regional Council’s income streams and maintaining majority ownership and control.
“We set a range of conditions around a potential IPO on 19 December last year and these will be met. The last hurdle is to satisfy ourselves around pricing and market conditions and we expect to make that decision in June with, all things being equal, an offer of shares in Napier Port occurring from early July.
“Today’s commitment to an IPO reflects the hard work that many people have put in to finding a positive solution that strikes the right balance for the Regional Council, Napier Port and the Hawke’s Bay community.”
Delivery against objectives
Rex Graham said indicative valuations of Napier Port supported the parameters that the Regional Council consulted upon in October – November 2018.
“The objectives in this exercise have not changed,” he said. “Napier Port needs significant investment in order to manage congestion and to prepare for future growth. It needs a new wharf, which is estimated to cost between $170 - $190 million and anticipated to be completed by 2022.
“We can’t afford to pay for this by imposing the costs of such a large commercial development on ratepayers. A minority IPO protects ratepayers from these costs and enables the Regional Council to diversify and de-risk its income streams, which are currently overly dependent on Napier Port.”
Mr Graham said the majority of feedback received from the local community during consultation supported a minority IPO but placed a high value on continued community ownership.
“A minority IPO will introduce new investors to our Port, but we will retain majority community ownership and control of this strategic asset, including through being able to vote our majority shareholding on the appointment of all directors.”
Mr Graham said resolving the issue of the Port’s capital structure would enable the Council to focus its effort and resources on continuing to address a wide range of pressing environmental challenges facing Hawke’s Bay, including ensuring its infrastructure and land and water management was able to withstand more extreme weather as a result of climate change.
Proceeds to the Regional Council from the IPO will be invested and held in a future investment fund, diversifying the Regional Council’s balance sheet and income streams.
share offer for locals
The Regional Council confirmed that all Hawke’s Bay residents, including local iwi, wanting to buy shares in Napier Port would be offered a guaranteed minimum allocation of shares and there would be a period for locals to pre-register their interest before an offer opened. There would also be a priority offer for Port staff. Details on the local priority offer and pre-registration would be provided by Napier Port shortly after the final Regional Council decision on proceeding with an IPO in June.
In addition to the appointments of Deutsche Craigs Limited and Goldman Sachs New Zealand Limited as Joint Lead Managers, the Council has confirmed the appointment of Forsyth Barr Limited as retail Co-Manager to the offer. Forsyth Barr will assist with the retail marketing of the offer alongside the retail affiliates of the Joint Lead Managers, Craigs Investment Partners Limited and JBWere Limited. Other retail brokers will also be invited to participate in the broker firm offer once it is launched.
Appointment of majority shareholder
In March, the Regional Council voted to introduce a number of additional measures to protect its majority shareholder position in Napier Port, including ensuring its shareholding could not be diluted to below 51 per cent and committing to appointing two new Council-affiliated directors to the Napier Port Board.
Today councillors voted to approve the appointment of Rick Barker and Blair O’Keeffe as directors of the Napier Port Board, subject to final approval of the IPO.
Hon Rick Barker currently serves as the Deputy Chair of the Hawke's Bay Regional Council, having been elected as a councillor for the Hastings constituency in October 2013. He was previously a Member of Parliament for 18 years, elected initially as the Member for Hastings in 1993, serving six years as a Cabinet Minister with a range of portfolios and also acted as Assistant Speaker to the House during his tenure. Rick is currently also working on behalf of the Minister for Treaty of Waitangi Negotiations as Chief Crown Negotiator on a number of negotiations to settle historic grievances against the Crown.
Blair is a professional company director, with governance experience in local and central government, and NZX listed companies. He is the former Chair of Maritime New Zealand and was also previously Chief Executive of a New Zealand port company for seven years. He has also chaired the Napier Port IPO steering committee on behalf of the Regional Council.
Mr Graham said Rick and Blair would bring a valuable combination of skills and experience to the Napier Port Board and ensure strong Council participation in its governance on behalf of the local community.
“We are fortunate to have this depth of commercial, political and port experience available from within Hawke’s Bay. Rick and Blair will make excellent Port directors, effectively representing the Port’s people, shareholders and the broader Hawke’s Bay community.”
Napier Port to carry
out the IPO
Rex Graham said, subject to final approval to proceed, the IPO would be conducted by Napier Port Holdings Limited as the entity that would prepare and lodge the product disclosure statement setting out the details of the IPO, offer the shares under the IPO, become the entity listed on NZX and be the parent company of Napier Port.
He said that given strong progress towards final confirmation of an IPO in June, it was now appropriate for questions regarding the IPO process and potential IPO to be addressed to Napier Port.
Napier Port Chair, Alasdair MacLeod, welcomed progress towards an IPO. He confirmed that the Port had been undertaking detailed preparatory work and said the Port Board was looking forward to making an offer of shares, pending the final Regional Council decision to proceed.
Mr MacLeod said the Port understands the public interest
in the project and would be releasing further information
about the IPO as soon as it can following the final Council
decision in June.