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MRP offer temporarily suspended; share refunds offered

Labour/Greens power policy successfully sabotages Mighty River float - at least for a few hours. PLUS: Forsyth Barr labels policy a "hand grenade."

NBR staff
Mon, 22 Apr 2013

The Greens/Labour power policy has sabotaged the Might River Power float - at least for a few hours.

LATEST: New Mighty River prospectus details impact of Greens/Labour policy

The government has suspended the MRP share offer until midnight, and says refunds will be offered for those who have already bought shares.

In a joint statement, Finance Minister Bill English says, “The existing MRP offer document already outlined the principal risks associated with an investment in MRP shares."

The document covered the risk that changes in the regulatory environment, including for the wholesale or retail electricity market, may affect the company.

“However, we received advice that the recent Labour/Greens proposal, if they were elected, to effectively replace competition with a state agency to act as a single buyer of wholesale electricity from generators, could be material to decisions to invest in Mighty River Power shares," Mr English says.

A supplementary disclosure document covering the Greens/Labour policy is being lodged with the Registrar of Financial Service Providers this afternoon, and is being published on the Companies Office website.

Those who have already brought MRP shares will be able to claim a refund for five working days, up to May 1.

The suspension comes at a time when potential MRP investors already seem spooked.

And an NBR Business Pulse Poll found a big majority of NBR Online paid subscribers are now less likely to buy MRP shares.

Over the weekend, Economic Development Minister Steven Joyce blamed last week's fall in Contact shares on the Greens/Labour policy scarring off investors.

The Labour-Greens proposal to establish, a central buying agency and market regulator, NZ Power, that would tender for new generation capacity has given the opposition parties their greatest traction since National came to power.

The Mighty River offer will be back on track within hours - at least in terms of paperwork. The psychological effect on potential investors could linger a lot longer.

Jitters won't be helped by a note released by Forsyth Barr analsyt Andrew Harvey-Green this afternoon, headlined "Labour/Green hand grenade."

To achieve the policy aim of household power bills being lowered by around $300 a year, there would need to be a $700 million reduction in generation revenue

Mr Harvey-Green says the pair's electricity policy would wipe between 5% to 20% from the value of listed power companies Contact and Trustpower, destroying up to $1.4 billion in shareholder value.

NBR staff
Mon, 22 Apr 2013
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MRP offer temporarily suspended; share refunds offered