Lyttelton Port to receive payments of $438.3m after cutting deal with insurers
Lyttelton Port Co [NZX: LPC], the South Island's biggest ocean trade hub, will be paid out $438.3 million plus GST by its insurers for the damage caused by the 2010/11 earthquakes after reaching a settlement with Vero, NZI and QBE.
The shares jumped 34 percent to $3.24 after the port reached a settlement with Vero, NZI and QBE in what will be one of the biggest insurance payouts the country's ever seen. The parties agreed on a gross amount of $450 million minus deductions of $11.7 million, and the port will be paid the outstanding $382.7 million plus GST by the end of February, it said in a statement. Before the deal was reached, the port had been paid $55.6 million by its insurers.
"That's a much bigger number (than thought) and reflective of what the stock's done today," said James Lindsay, portfolio manager at Tyndall Investment Management.
The settlement covers claims under the port's material damage, business interruption and contract works policies. An issue involving a third party hasn't been resolved, and may lead to the port making an additional recovery, the company said.
"Both parties are satisfied with the outcome, coming three-and-a-half years after the first earthquake in September 2010, and recovering the complexity of the claims," Lyttelton Port chairman Trevor Burt said. "This enables LPC to rebuild the port, with the freedom to optimise the facilities for the future."
Last month, the Christchurch-based company said it expects earthquake adjusted profit of between $15 million and $16 million in the 12 months ending June 30, 2014, compared to earnings of $15.1 million in the year just been.
The company has said it intends to expand the eastern end of the port to build two berths and a long-term container terminal, and is receiving feedback from its insurers on its draft reinstatement and development plan.