Mighty River Power share price range revealed
Shares between $2.35 and $2.80 each. The offer is expected to open April 15. PLUS: RAW DATA - MRP IPO Fact Sheet, Q&A.
Shares between $2.35 and $2.80 each. The offer is expected to open April 15. PLUS: RAW DATA - MRP IPO Fact Sheet, Q&A.
The government has set an indicative price range for shares in Mighty River Power of $2.35-$2.80 per share and added a loyalty bonus scheme for local retail investors.
Offer documents released at a media conference today provide an implied cash yield of 4.3% to 5.1% in 2013 and 4.6% to 5.5% in the 2014 financial year. The gross yield is forecast as 6% to 7.1% in 2013 and 6.4% to 7.7% in 2014.
The prospectus notes that total dividends to be paid to shareholders in the 2014 financial year are assumed at $173.6 million (13c a share).
Finance Minister Bill English says the loyalty scheme – where New Zealand retail shareholders can subscribe for one new share for every 25 they own (up to a maximum of 200) two years after listing – is designed to achieve “widespread” and long term New Zealand ownership.
The general offer opens on April 15 and closes May 3, with an institutional offer and bookbuild over two days on May 7 and 8 and pricing announced on May 8.
Shares are expected to be listed on May 10.
Offer documents, including the prospectus will be available online at www.mightyrivershares.govt.nz later today with hard copies available on request.
686 million new shares
The government will offer up to 686 milloin new shares amounting to 49% of the company, valuing the energy company at between $3.29 billion to $3.92 billion on an indiciative market capitalisation.
That means the government expects to raise between $1.6 billion and $1.9 billion from the share float.
With net debt of $1.134.5 billion this gives an enterprise value of $4.424 billion to $5.054 billion.
Forecasts
The prospectus forecasts ebitdaf (earnings before interest, tax, depreciation, amortisation and financials) of $382.6 million in 2013, rising to $497.9 million for 2014 financial year.
Net profit is forecasted at $94.8 million in 2013 and $160.4 million in 2014.
The sale, of up to 49% of Mighty River, will be the first initial public offering of a government business since the Contact Energy IPO in 1999.
About 440,000 New Zealanders pre-registered their interest in buying MRP shares.
Tiwai Point uncertainty
The Mighty River Power share offer comes amid uncertainty about the future of the Tiwai Point aluminium smelter, which took up approximately 13% of this country's electricty demand in 2012.
Tiwai is supplied by Meridian Energy, which announced last week that a new supply contract was unlikley to be reached with Rio Tinto subsidiary Pacific Aluminium, which controls the Bluff smelter, in which 3000 New Zealnders depend on for their jobs.
Mr English acknowledged the uncertainty surrounding the smelter could affect final pricing of Mighty River shares.
He says it is up to investors to weigh up the risks, including uncertainty at Tiwai, potential future droughts and changing power prices.
The procspectus notes: "If the smelter were to significantly reduce its electricty consumption or cease consumption altogether, the resultant drop in demand could lead to a sustained reduction in electricity prices in general."
RAW DATA: MRP IPO Fact Sheet (PDF), MRP Offer Q&A (PDF)