Cut-price Meridian sale shows National’s warped priorities

Source: Green Party – Press Release/Statement:

Headline: Cut-price Meridian sale shows National’s warped priorities

This is a fire-sale by a National Government that’s desperate to convince Kiwis to participate in these unpopular asset sales.

National’s plan to sell Meridian shares off cheaply shows that it is fixated on trying to avert political disaster, rather than focusing on what is best for the New Zealand economy, Green Party Co-leader Dr Russel Norman said today.

The Meridian offer documents released today forecast an “underlying gross share dividend yield for New Zealand retail applicants of 8.4%-8.9%”. The Mighty River Power sale price was set to achieve a 6-7% dividend yield. This means that Meridian is being sold at a significant discount compared to Mighty River Power.

Latest official figures put the cost of the asset sales at over $124 million, with the net foregone profits from Mighty River Power running at an additional $2.3 million a week. The ‘buy now, pay later’ scheme for Meridian shares has been costed at $60 million by the Parliamentary Library. The Government has failed to produce a costing.

“This is a fire-sale by a National Government that’s desperate to convince Kiwis to participate in these unpopular asset sales,” said Dr Norman.

“Hocking off Meridian at a bargain basement price only worsens the economic case for selling these profitable, strategic assets.

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“National has spent $124 million on asset sales already. The ‘buy now, pay later’ scheme will add another $60 million to the cost, let alone the fees for the brokers, the lawyers, and the ad-men.

“The vast majority of Kiwis are not going to buy these shares. We just end up losing our public assets and footing the bill for sale.

“Only 2% of Kiwis bought shares in Mighty River; the turnout for Meridian is likely to be much less. Bill English talks of ‘tens of thousands’ of retail investors, which is far off the 250,000 per sale that was projected.

“John Key and Bill English should be embarrassed. They’re spending hundreds of millions of dollars of public money on asset sales that Kiwis don’t want. They’re forcing taxpayers to subsidise foreign banks to buy our public assets. And they’re selling our assets at a rock bottom price for political reasons.

“A responsible government would drop these failed asset sales and, instead, focus its efforts on creating jobs, reviving the manufacturing sector, and greening our economy,” said Dr Norman.

Additional information:

Green Party Costwatch

Parliamentary Library costing of ‘buy now, pay later’ scheme

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