Member log in

RAW DATA: Bill English, Chris Finlayson statement on iwi participation in government share offers

READ ALSO: Govt shoots down 'Shares plus' - only to offer 65 iwi power company shares

-------------------

RAW DATA: Statement from the Finance Minister's office:

Iwi groups yet to complete their Treaty settlements will be offered the opportunity to participate in the Government share offer programme, Finance Minister Bill English and Treaty Negotiations Minister Chris Finlayson say.

“This is a result of our constructive engagement with Iwi leaders and their technical advisers,” the ministers say. “It is another example of how direct engagement with the Crown can produce pragmatic solutions that provide an opportunity for more New Zealanders to participate in the share floats and support Iwi and the Crown to settle historic Treaty claims.”

Since the consultation with Maori in February, the Government has been talking to iwi that have expressed an interest in participating in the proposed Initial Public Offerings but whose Treaty settlements may not be completed in time for them to buy shares at the time of the offer.

As a result of today’s announcement, Iwi yet to settle their claims can choose to receive a percentage of their forecast settlement package “on account” in the form of shares in the Government share offer companies. Mr Finlayson says “on-account” arrangements were not new for Iwi in negotiations with the Crown. The facility has been used by many Iwi in the past.  They must pay the full issue price and any amount drawn down will be deducted from the final settlement.

“One of the stated goals of the share offer programme is to give as many New Zealanders as possible the opportunity to invest in these companies, as individuals or through institutions,” Mr English says. “This process will allow more local investors to do that.”

The Government confirmed on Monday that the sale of up to 49 per cent in Mighty River Power will take place in the first half of next year, subject to market conditions. This will be followed by sales of up to 49 per cent of Genesis Energy and Meridian Energy in the subsequent 12 months, again subject to market conditions. 

“The Government has already announced that individual New Zealanders seeking up to $2000 worth of shares will be guaranteed that amount, and that they will get a loyalty bonus if they hold on to those shares for a period likely to be about three years,” Mr English says.

If yet-to-settle Iwi meet criteria for eligibility, they will be able to buy ordinary shares at the IPO price, on the understanding that the purchase forms part of their overall settlement package.

They will not be eligible for loyalty bonuses, as these will apply only to individual New Zealanders.

“It does not change the total amount of Treaty settlements. It simply allows Iwi more flexibility about how their settlement money is invested, and we believe it will enhance the share offer programme,” Mr Finlayson says.

Around 65 Iwi may be eligible to participate in on-account share purchases. They would, like all other investors, be encouraged to first seek independent financial advice, the ministers say.

Each Iwi would be limited to 5 per cent, 10 per cent or 12.5 per cent of their likely total settlement, depending on their situation.

  • A 5 per cent maximum of their likely settlement would be available for Iwi not “local” to any of the power companies’ assets – for example, if there was no dam or other operating asset within the Iwi’s area.
  • A 10 per cent limit would apply to Iwi who are “local” to any of the companies.
  • A 12.5 per cent limit would apply to Iwi who are “local” to any of the companies, had reached an Agreement in Principle with the Crown, and had already agreed a quantum amount for settlement.

Mr English says the actual amount to be advanced as on-account payments for shares will depend on the level of take-up by Iwi. The Treasury estimates that if all Iwi take up their full entitlement, this will amount to $145 million over the entire Government share offer programme.


“Even if all Iwi take up their full entitlement and allocate all of it to the Mighty River Power share offer alone, it would still represent less than 5 per cent of the shares of Mighty River Power,” Mr English says.

“However, we anticipate the take-up being less than the possible maximum and it is also unlikely that all Iwi will choose to invest their total allocation in a single company.”

READ ALSO: Govt shoots down 'Shares plus' - only to offer 65 iwi power company shares

Comments and questions
21

weak

Have to say I agree. More wasted money and resources. When will we have a government with a concept of equality - I want a special option for Europeans only.

Groan. When is enough 'enough'?

Pragmatic.....enhancing the opportunity for all New Zealanders to "move on".

Weak as usual

Close them down, don't leg them up

What's the problem? This is a good outcome. It's just a sensible commercial arrangement for a debt which is coming down the track anyway, and would probably be part funded from asset sales.... They can also lock them in for 5+ years and maybe it'll help precipitate them getting to the table so they can complete treaty negotiations. Good outcome. Maybe the government could pay off other creditors this way.....

Sensible commercial arrangement?

We've already got one price distortion ($2000 share parcels being guaranteed to small NZ investors at the expense of larger institution investors).

Now we've got shares being reserved for iwi too.

It's become all about selling the share sale politically. Getting the best price for the taxpayer, and reducing debt, has been lost as an aim.

and... lets see which iwi that have settled and are cashed up are prepared to invest in these NZ assets, or stand on the sidelines and throw sticks...

sell them back something they already own - friggin awesome work Bill... they didn't learn anything 150 years ago either. Chuck in a couple of extra blankets for the use of air.....

So if they all chose to participate to the max, there would be $145m over around $10b to $12b worth of shares... A maximum of 1.45% of the shares. Hopefully lower, though. I guess it's not too bad. But I'd rather it be zero. Gravy train... Must... Stop.

They sang a song, and made $145m. I wish making that kind of money were that easy....

No wonder this country is broke, if we keep on financing the gravy train.

Time to move to OZ I think.

Yes please go to aus. haere ra

clever politics

So with this clever litle jem of a plan are Ngai Tahu (5 settlements); Ngati Porou (3 settlements); plus every other tribe with multiple full and final settlements going to be in a position to participate??? if so why are they entitled to participate as they have been settled up?
This is utter BS. Why do I have to pay cash for my shares and then also pay for shares for these free loaders?? The claim for water rights is null and void...Oct 2008 law passed.

The water became an issue only after the announcement of the partial energy companies float. A claim for water only emerged at this point. In my book this is well and truly after October 2008 when all new claims would not be recognised. Enact the law John Key.....sack Finlayson, he is so compromised it unbelievable that he is in the position he is. Just enact the law as it stands..no argument...no claim...no share give away. Is National (whom I have voted for over many years) gone absolutely spineless...where is the leadership here?

Yet another gutless decision driven by political imperatives!
WG

I thought the value of shares allocated will be deducted from any future settlement - it is not a giveaway in itself, at all?

The partial privatisations should be about selling shares to the highest bidder, so the govt can get the best possible price and money can be raised to pay off govt debt or spend on infrastructure.

That means selling to big institutional investors.

Instead we have special allocations for small NZ sharebuyers, and now special (Crown-funded) allocations for iwi

OK, thank you, but there is something good in this I think because ... the percent of all shares that will be held as a result of these private allocations is small (under 5% is it, or under 4%). Afterwards, these special allocatees (holders) will get a new experience, and its importance will be very significant I reckon: the value of their shares will increase (probably - and then vary, like all else). It will be a non-mediated experience when what people have sought is unbounded control and/or guarantees, if you follow me.
But I forget how the value of their initial shares be set, so I don't know how badly this disadvantages the institutional investors who can get the other 95%. That shouldn't worry them should it?

Makes utterly no sense in terms of achieving the best price with an IPO, but political genius.

Keeps the Maori Party onside for MMP coalition purposes, and the great NZ public probably won't be too fussed because no extra money is spent (but of course money is lost because the float becomes a joke and serious large investors have to make way for Maori and mum-and-aad allocations)

We desperately need John Key the man and the leader NOT the politician. The maori issues is becoming one long stuck record.