Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Top-Up Plan For Contact’s Small Shareholders

Innovative Top-Up Plan For Contact’s Small Shareholders

Small shareholders in Contact Energy will be offered the opportunity to acquire additional shares in the company in lieu of their regular dividend payments, in a new scheme announced today by Contact Energy Limited today.

The share top-up plan is a first for New Zealand. While traditional share top-up schemes have involved issuing new shares, participants in the plan will instead buy already issued shares from the organising broker, ABN AMRO Craigs Limited. This means the plan will not dilute the value of other shareholders’ shares. The new scheme will be open to Contact shareholders who hold 5000 shares or fewer. Approximately 100,000 shareholders fall into this category.

“Contact has the one of the largest bases of small shareholders in New Zealand and the company is committed to meeting the needs of these investors,” said Contact’s chairman, Phil Pryke. “We also recognise that many of our shareholders are not habitual investors and find it difficult to cost-effectively increase their stakes.

“My fellow directors and I have had consistent feedback from small shareholders and their representatives that some shareholders would rather use their cash dividends to increase their stake in the company,” Mr Pryke said.

“We have been working for some time on a plan that would meet this need without disadvantaging other shareholders.”

A traditional dividend reinvestment plan would see a company issue new shares in exchange for the dividend payment, thereby diluting the value of all currently issued shares.

“However, Contact does not require new capital at present and we do not want to dilute the company’s issued capital each time there is a dividend.

“I am personally delighted to be able to offer shareholders this plan as it offers benefits to all shareholders. “Participating small shareholders are able to increase their holding in a cost-effective manner without having an impact on the value of the rest of the company’s issued capital,” said Mr Pryke.

“All shareholders will also share in any associated liquidity benefits.”

Mr Pryke said the plan would be administered by Contact’s share registry, Computershare and ABN AMRO Craigs, as organising broker.

“There will be no costs to participating shareholders and no commission paid to ABN AMRO Craigs.”

Mr Pryke said any shareholders with 5000 or fewer shares could register for the plan. Shareholders who did so would have the opportunity to purchase more shares with each six-monthly dividend payment until they held more than 5000 shares or the plan was withdrawn. The limit has been set at 5000 shares as this was assessed as being at a level where shareholders could cost effectively buy shares without the aid of this plan.

Eligible shareholders would be invited to register for the plan prior to 20 November 2003. This would ensure that their share of the 2003 final dividend would be reinvested in additional shares.

Eligible shareholders could apply for the plan at any time, as could any new shareholders who purchased 5000 or fewer shares in Contact on the NZX in the future.

“As each dividend payment is reinvested in shares, shareholders will be advised by Computershare Investor Services as registrar, how many shares they have purchased with their dividend, the balance of dividends held over until the next dividend payment, as well as a notification of gross income and imputation credits.

The Chief Executive of the New Zealand Exchange, Mr Mark Weldon, praised the Contact initiative.

“This is a very positive and highly innovative programme that Contact has initiated,” said Mr Weldon. “It's a tremendous way to recognise and reward smaller retail investors, allowing them to grow their capital stake over time in a low cost way, whilst at the same time encouraging greater participation in the company.”

ABN AMRO Craigs Managing Director, Mr Neil Craig, said his firm was delighted to be involved in helping to design and implement the plan. It is truly unique and allows small retail investors, many who bought shares for the first time in the float of Contact, to top-up their shareholdings without cost.

© Scoop Media

Business Headlines | Sci-Tech Headlines


Maritime Union: Deepening Supply Chain Crisis Requires Action

Maritime Union of New Zealand National Secretary Craig Harrison says the global COVID-19 pandemic exposed pre-existing weaknesses in our logistics sector, and created enormous problems... More>>

Air New Zealand: Employees Recognised With $1,000 Share Award

The efforts Air New Zealand employees made during one of the airline’s toughest years will be recognised via an award of $1,000 worth of company shares to all permanent employees... More>>

Consumer NZ: Bank Complaints On The Rise, Survey Shows

Nearly one in five Kiwis had a problem with their bank in the past year, Consumer NZ’s latest satisfaction survey finds. Consumer NZ chief executive Jon Duffy said the number of bank customers reporting problems had jumped to 18%, up from 11% in 2020... More>>

Mercury: Enters Into Binding Agreements To Acquire Trustpower’s Retail Business

Mercury NZ Limited (Mercury) has announced that it has entered into binding agreements with Trustpower Limited (Trustpower, NZX:TPW) to acquire Trustpower’s retail business for NZ$441 million... More>>


ASB: New Zealanders Missing Out On Hundreds Of Millions In KiwiSaver Government Contributions

New Zealanders have just over a week to ensure they’re eligible for the maximum annual government KiwiSaver contribution... More>>

Stats NZ: GDP Climbs 1.6 Percent In March 2021 Quarter Following December Dip

Gross domestic product (GDP) rose by 1.6 percent in the March 2021 quarter, following a 1.0 percent fall in the December 2020 quarter, Stats NZ said today. "After an easing of economic activity in the December quarter, we’ve seen broad-based growth in the first quarter of 2021... More>>