Hawke’s Bay Regional Council is promising locals that they will be prioritised for buying shares in a potential minority sale of Napier Port.
The council is one step closer towards an initial public offering (IPO) in the port as members voted to make protections for its majority ownership position in any future share offering.
It established a new council controlled organisation (CCO) Napier Port Holdings Limited, which would be the entity taking a minority stake in Napier Port to market.
A final decision on whether to proceed with a minority listing will be made in the next four to six weeks.
Council chair Rex Graham says it’s likely domestic ownership of Napier Port would remain high post any IPO.
“Creating a new CCO will ensure any share offer is made through one organisation and that liability for the listing and ongoing port performance would sit with the right parties – the listed company and its directors,” Graham says.
Protections supported by the council today if a minority listing of the Port goes ahead, include:
- Ensuring the council’s majority ownership position in Napier Port could not be diluted, such as through any subsequent share issues or equity raising, below 51 per cent in the future.
- The right to determine the composition of the Napier Port Holdings and Napier Port Boards through a majority vote.
- Appointing two majority shareholder-appointed directors to the Napier Port Holdings and Napier Port boards.
- Reducing the threshold at which Napier Port Holdings and Napier Port would need to seek shareholder approval for significant transactions.
- Inserting a restrictive covenant on the strategically important port land at the main Westshore site, including limiting any potential future sale of the land without council consent and limiting the use of the port site to port purposes.
Graham says existing laws would provide core protections for the council as majority owner of Napier Port, such as limitations on takeovers and the right to block material transactions and changes to the company constitution.
He says while final decisions on a minority IPO of Napier Port were still to be made, the council was making decisions that reflected local feedback during the consultation process around protecting local ownership and control of Napier Port without diluting any commercial value.
“Through confirming two majority shareholder-appointed directors and providing for additional protection of its majority ownership position, the Regional Council will gain a more direct level of involvement in the governance of Napier Port on behalf of the local community under a minority IPO.
“It’s important to note that under a minority IPO, all shareholders, including any local investors would enjoy rights to raise matters with the company, to vote and participate in annual meetings and the right to participate in any dividends that may be declared.
“We consulted on a minority IPO with the commitment of retaining majority ownership on behalf of the people of Hawke’s Bay. The decisions made today support those commitments and set the Regional Council up well to consider final decisions on whether to proceed with a minority IPO,” Graham says.
As part of the preparatory phase of the potential minority IPO, the port and its advisors will begin introducing Napier Port to a range of potential investors in New Zealand and offshore in order to gauge investor appetite and inform the council’s decision making.
