Mutually Beneficial Deal

Published: Wed 23 Dec 2009 11:37 AM
Mutually Beneficial Deal
Hawke’s Bay Regional Council has successfully purchased the 8.3 percent share holding in the Port of Napier Ltd from Horizons (Manawatu-Whanganui) Regional Council.
The rationale for the purchase by Hawke’s Bay Regional Council is that 100 per cent ownership allows for efficient restructuring of the Council’s total investment portfolio including the potential creation of a holding company structure. The aim of this body would be to focus the investment portfolio on regional development investments of benefit to Hawke’s Bay.
“By owning 100 percent of the port, the Regional Council can improve its immediate return on the investment portfolio and enable us to better achieve some of the strategic regional economic development goals that we are now aiming at to benefit the region’s businesses and ratepayers,” says Hawke’s Bay Regional Council Chairman Alan Dick.
The proposal to purchase the shares was highlighted for public consultation in the Council’s 10 Year Plan earlier this year, and confirmed in the formal adoption of that plan.
Further aspects in favour of the transaction included a better return on investment than is currently achieved by holding cash, and an immediate book value gain that will be realised on the Hawke’s Bay Regional Council’s balance sheet.
The Chairman of Horizons Regional Council, Garrick Murfitt says the sale of the port shares was agreed when the Long Term Council Community Plan (LTCCP) was put out for consultation earlier in the year and the majority of people supported this proposal. He says the cash from the sale of the shares can now be invested in their region.
“Council has set up a holding company that will have people with commercial skills to manage the returns from the sale of the shares. Returns from all investments are for the benefit of all ratepayers in our region,” says Mr Murfitt.
The Regional Councils have negotiated the purchase since July and it will be completed no later than 31 December.
The purchase will be made from funds in the Sale of Land account which has been built up from the sale of leasehold residential and commercial properties which the Regional Council inherited from the Harbour Board.
Hawke’s Bay Regional Council has held the majority 91.7 percent shareholding in the Port of Napier Ltd for twenty years, since Regional Councils were first established.

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