Partial listing for Napier Port mooted as way to fund wharf expansion
Partially listing Napier Port is among the options on the table for Hawke's Bay Regional Council as it considers how it's going to pay for a $125 million expansion of the transport hub's wharf.
The port operator this week declared a record profit of $16.7 million in the September 2017 year and announced it's seeking resource consent for a 350-metre wharf to be constructed on its existing seawall, which would cater to bigger cruise ships and freight vessels. However, the port can't fund that without dividend relief or a capital injection, and the regional council appointed a Capital Structure Review Panel to come up with some ideas on how to bridge the gap.
The panel, chaired by Hawke's Bay Regional Investment Co's Chris Tremain, came up with nine options in a report to council to support the port's growth, including listing it on the NZX with council retaining a majority stake.
Independent adviser Flagstaff Partners estimated a partial privatisation could fund $85 million of the port's capital requirements and offer upside for council to invest elsewhere.
"There is a question about whether the size of the market listing would be material enough to promote ongoing trading of shares, which may support the share price over time," the report said.
The prospect of a new listing would be a boon to NZX, which has been criticised for not attracting enough new companies to the bourse. Lyttelton and Auckland ports have been listed in the past, while Tauranga and South Port in Bluff are currently on the exchange. .
The report's listing option was intriguing enough for it to join a short-list of ideas worth more work by the panel. Other options the council wants to be further explored include the port hiking prices or introducing a levy, council charging ratepayers a levy, introducing a minority investment partner, or leasing the operation to another party.
Listing and leasing were the only options mooted to tick all the boxes in the panel's evaluation, and the leasing option raised the question as to whether council needed to be the operator, a conundrum Auckland Council is currently grappling with.
"The report lays out quite clearly some of our challenges and options," council chair Rex Graham said in a statement. "We are releasing the report to the public well in advance of the LTP (long-term plan) consultation so people can thoroughly consider the options. It is important we have an informed and public discussion."