The Greens have steadfastly opposed asset sales from day one. This move will keep more of Meridian in public ownership.
The Green Party has announced it will offer investors in Meridian Energy the choice of not paying their second instalment payment in return for the Government retaining more shares in public ownership, Green Party Co-leader Dr Russel Norman said today.
In National’s sale of Meridian in October, investors paid a dollar per share up front and owe a further 50 cents in May 2015 to take full ownership of the shares. The Green Party proposal will give investors the option to opt out of the remaining 50 cents instalment and, instead, receive fewer full shares which will remain in public ownership instead (the number of shares investors forego will depend on the current share price).
The shares investors forego will go to the Crown to settle the investors’ payment obligation. If the share price in 2015 is $1.50 and all investors take up this option, the Crown’s ownership of Meridian will be 67-68%, rather than 51%.
This option will be open to both individuals and institutions and will be voluntary.
“This plan will give investors choice and will see more of Meridian in public hands,” said Dr Norman.
“This is a smart solution to keep more public ownership of Meridian. It is a win for the public and a win for those investors that want to get out of the Meridian sale.
“Effectively, investors will be able to choose to settle their obligation in shares, rather than cash. New Zealanders who don’t want to put more money into their Meridian investment will now have another choice.
“The Crown will trade higher ownership in Meridian for receiving slightly less asset sales revenue.
“The higher net dividends that the Crown will receive from owning more of Meridian, rather than receiving asset sales cash, will add up to $18 million a year to the government surplus.
“The Government holding on to a greater number of Meridian shares is more financially beneficial than selling them now.
“Instalment sales, such as National’s sale of Meridian, are notorious for investors refusing to pay the second instalment, especially when the value of the shares has fallen since the first instalment was paid.
“The Greens have steadfastly opposed asset sales from day one. This move will keep more of Meridian in public ownership.
“New Zealanders oppose asset sales. A strong no vote in the current referendum sends a strong message to the Government to use all means possible, such as the Meridian proposal we have announced today, to keep as much of our assets in public ownership.
“Further options to return the assets to public ownership will depend on the state that the Crown accounts are in following National’s record borrowing binge and the strength of the mandate that we receive in the current referendum,” said Dr Norman.