Meridian Shares

[Wayne]

If that were ever to be the case again, the foreign fund managers who are allocated cheap shares in some IPO don't care.
They would have made their huge profits on the back of the NZ taxpayer and sold out.....long gone.
Potentially leaving Kiwi taxpayers with the problems.
We don't just get ripped off once, we get ripped off twice.

We do seem to have a love affair with sending our profits directly offshore for foreigners to benefit from.

Remember NZ Rail - the foreign owners sold the ferries and leased them back.
Expatriated the freed up cash.

Telecom - the foreign owners actually sold and leased back parts of the network.
They also expatriated huge sums.
Raped and pillaged we were!

[speights boy]

Almost a year after the last (official) state asset sale, David Hargreaves has a look at how the investors - and the taxpayers - have fared

			Mighty River Power $2.50 $3.34 +33.6 Meridian Energy $1.00 $2.14 +114.0 Genesis Energy $1.55 $2.205 +42.3 Air New Zealand $1.65 $2.575 +56.1 NZX 50, May 2013 4653 5754 +23.7 NZX 50, October 2013 4853 5754 +18.6 NZX 50, April 2014 5103 5754 +12.8

Collectively, therefore, the shareholdings sold are now worth about $2.5 billion more than the New Zealand taxpayer, courtesy of the crown, received for them.
Add in the $580 million worth of dividends and that is north of $3 billion of value that the taxpayers are not seeing thanks to the asset sale.
..............
Given the uncertainties, particularly in the power sector, that existed in 2013-14, the Government would have been far better to wait to sell the assets.
But philosophical dogma ruled the roost.
And now taxpayers miss out on the value that's being added subsequently to those assets.
Good for the investors though!

http://www.interest.co.nz/opinion/74219/almost-year-after-last-official-state-asset-sale-david-hargreaves-has-look-how-investo

[Glenn]

Dont forget it goes against the overseas buyers at times. Remember Telecom sold the yellow pages for a Billion bucks and that has been a total loss to the retirement fund that purchased it. So selling to overseas investors is not always in their favour.
When I was young (a couple of years ago) all the meat companies were owned by big English firms. I remember every year there always problems with unions and what ever.
Now the likes of Talleys (local firm) are big on the scene and you never hear about problems. Plenty of money reinvested in far more efficient works that cost less per animal to process.

[artemis]

Almost a year after the last (official) state asset sale, David Hargreaves has a look at how the investors - and the taxpayers - have fared

End of the day the Government had a mandate to sell the assets. Which to my mind was better than the alternative of a Labour government with NZPower. Yes the amount raised was less than expected because of the 'uncertainties' - that is a Labour / Greens policy which has since been dropped.

It would have been a disaster, politically speaking, for the government to stop the asset sales because of a rather whacky and ill thought out opposition policy. The government would have looked weak, indecisive, backed into a corner. Government decisions are not necessarily made solely on economic grounds. There are plenty of examples of policies designed to capture votes.

[Wayne]

End of the day the Government had a mandate to sell the assets. Which to my mind was better than the alternative of a Labour government with NZPower. Yes the amount raised was less than expected because of the 'uncertainties' - that is a Labour / Greens policy which has since been dropped.

It would have been a disaster, politically speaking, for the government to stop the asset sales because of a rather whacky and ill thought out opposition policy. The government would have looked weak, indecisive, backed into a corner. Government decisions are not necessarily made solely on economic grounds. There are plenty of examples of policies designed to capture votes.

For a start they didn't have a mandate.
Elections are fought across a number of issues - not just one - so to say a win gives you a mandate for all you mentioned during the campaign is just silly.
Surveys clearly showed the public didn't want asset sales and we (the tax payers) could be said to down the tubes for $2.5billion.

It wouldn't have been a disaster for the Govt to show some sensibility.
One of the problems with politics is it is all about how it looks rather than what is right and sensible.
In this case the decision was portrayed as being about economics (English said so) but was philosophical dogma.

As a shareholder in the companies concerned I am richer - the NZ Inc is poorer!

[Wayne]

Dont forget it goes against the overseas buyers at times. Remember Telecom sold the yellow pages for a Billion bucks and that has been a total loss to the retirement fund that purchased it. So selling to overseas investors is not always in their favour.
When I was young (a couple of years ago) all the meat companies were owned by big English firms. I remember every year there always problems with unions and what ever.
Now the likes of Talleys (local firm) are big on the scene and you never hear about problems. Plenty of money reinvested in far more efficient works that cost less per animal to process.

Telecom was private then and made a very good sale. They knew the Yellow pages had done their dash.

As for the meat companies - employment laws and relations have changed across the board, not just because they are NZ owned.

[Glenn]

Telecom was private then and made a very good sale. They knew the Yellow pages had done their dash.

As for the meat companies - employment laws and relations have changed across the board, not just because they are NZ owned.

So what you are saying it is ok for a private company to sell a lemon but not the government.
I find it strange how everyone can talk about Government owned companies and those company's products / services as if we the citizens own them and understand the business.
When I worked for the Post Office (telecoms) the service was terrible despite most of us working our best to make it better and we got endless letters in from the customers asking us to spend in their back yard. Who on earth writes letters and tries to curry favour with the likes of Vodafone or Fletchers.
No politicians and civil servants are not good creators of wealth unless your call printing money and forcing people to lay down their life for the state as "good".

[Wayne]

So what you are saying it is ok for a private company to sell a lemon but not the government.
I find it strange how everyone can talk about Government owned companies and those company's products / services as if we the citizens own them and understand the business.
When I worked for the Post Office (telecoms) the service was terrible despite most of us working our best to make it better and we got endless letters in from the customers asking us to spend in their back yard. Who on earth writes letters and tries to curry favour with the likes of Vodafone or Fletchers.
No politicians and civil servants are not good creators of wealth unless your call printing money and forcing people to lay down their life for the state as "good".

I think the Govt is less likely to sell a lemon - they sell good stuff.
You need to seperate the Post Office from the next step - Telecom the SOE - then Telecom the private company.
As an SOE things started to change for the better.

I agree with your last statement to a degree. With the right structure it can work and has worked. Air NZ is a good example. NZ Rail is a bad one.
The generators are another good example - give them a commercial structure and away they go.

[speights boy]

So what you are saying it is ok for a private company to sell a lemon but not the government.

Telecom offered yellow for sale.
The fact that the two buyers didn't do their DD properly and paid too much is their problem.

However it would have been very different for the Govt to try to sell Solid Energy back to the likes of you and me.

[Glenn]

You need to seperate the Post Office from the next step - Telecom the SOE - then Telecom the private company.
As an SOE things started to change for the better.

.

Too true but the same idiots were still in charge and just played out a tragedy as if they suddenly knew what they were doing.
Actually of my 27 years in the company the Telecom (both SOE and private company) were the best times for me and were my easiest environment to operate in.
Unfortunately there was a lot of fear and many of the nice people either turned nasty or were frog marched off the premises.

As for holding up the generators as good examples. What they are doing is identical to Telecom. Creating a mean lean machine which enhances it value. Meridian is going to hand back cash to the shareholders. This will reduce the dividend liability and enhance the value of each share. Nothing ever follows exactly the same path so the hard call is for us shareholders is the judge when to leap from the moving boat onto the wharf.

When back in the good bad days all the young men would jump from the Devonport ferry onto the wharf or from the wharf onto the departing ferry.
I remember my brother going for a swim. Perhaps I was either more cautious or nimble but despite some mighty leaps I never got wet.
Too bad my share market experience has not been as dry.
That was a dangerous test of our manhood.

[Wayne]

Too true but the same idiots were still in charge and just played out a tragedy as if they suddenly knew what they were doing.
Actually of my 27 years in the company the Telecom (both SOE and private company) were the best times for me and were my easiest environment to operate in.
Unfortunately there was a lot of fear and many of the nice people either turned nasty or were frog marched off the premises.

Obviously a different experiance to my 37 years (and counting) in NZPO (state), TCNZ (SOE), TNZ (private), Spark (private).
No nastiness in Christchurch, no frog marching.

As for holding up the generators as good examples. What they are doing is identical to Telecom. Creating a mean lean machine which enhances it value. Meridian is going to hand back cash to the shareholders. This will reduce the dividend liability and enhance the value of each share. Nothing ever follows exactly the same path so the hard call is for us shareholders is the judge when to leap from the moving boat onto the wharf.

If a company is making good coin and they have nothing better to do with the proceeds they should give it back to the shareholder.
Look at the difference between the treatment (in the market) of Contact and Meridian.
The generators were set up by the Govt of the day and left to become a good business - enhancing the shareholder value. They did this well (though I don't agree with how they did it (revalue and justify raising prices under the regulation of the day) they did what they were supposed to do).
The Crown makes a poor owner when they start to interfere - when they use the business for other purposes.
Like in the good ol' days when unemployment would come down because NZPO and MOW were told to employ more.

[artemis]

For a start they didn't have a mandate.
Elections are fought across a number of issues - not just one - so to say a win gives you a mandate for all you mentioned during the campaign is just silly.
Surveys clearly showed the public didn't want asset sales and we (the tax payers) could be said to down the tubes for $2.5billion. ......

Disagree. They campaigned very specifically on asset sales and became the government. It was front and centre of the campaign. Of course a lot of people disagreed then and now with some of what they proposed and are now doing. In fact they may well have lost votes because of the asset sales policy. But nobody was going to die not knowing what the asset sales proposal was.

The anti asset sales people and groups spent a lot of time and money on their cause, at least partly because they saw votes in it, especially re reducing power bills. So voters were - or should have been - up with the play on both sides of the argument.

[speights boy]

Disagree. They campaigned very specifically on asset sales and became the government.

Yep.
"Mum and Dad kiwi investors at the front of the queue"
Conveniently omitting to add; "but only to hand out small amounts however, because we must reserve plenty for off shore fund manager mates."

[Wayne]

All water through the dam now.
I am richer because of it and NZ Inc is poorer.
More's the pity.

[speights boy]

Excellent news

Tiwai Pt deal done with Meridian

Had Meridian pulled out of any deal with the smelter, or its owners decided to close down, a glut of cheap electricity could have come onto the market, leading to a possible fall in wholesale prices.
Prospects of this happening anytime soon now appear unlikely.