Mighty River: detail plans

Potential long-term investors in Mighty River Power should document their intentions in case their circumstances change and they need to sell, WHK tax principal Scott Mason says.

With more than 290,000 people pre-registering for the shares in the state-owned enterprise, it was likely some were looking at a quick capital gain and others were wanting to receive incentives to be offered for holding the shares for the longer term.

''My pick is that because of the incentives to hold, the issue will be oversubscribed by a substantial chunk as people hold on to their shares.

''Post issue, the market could shoot up quickly and drive people to change their views on holding. They may have bought to hold but feel they are better off to sell.''

Trusts or companies buying the shares could pass a resolution indicating their intentions to hold the shares for the long-term and individuals could make a note of any discussion they had with their sharebroker, Mr Mason said.

That would indicate to the Inland Revenue Department that although that was the intention, circumstances had changed.

It was difficult to retrospectively document intentions, he said.

The Otago Daily Times has been contacted by readers asking about the pre-registration site, particularly where the box needs to be ticked that ''you are not in the United States nor are you acting for the account or benefit of any person in the United States''.

Brokers contacted yesterday are still not allowed to talk publicly about the partial sale of the state-owned enterprise but believe the phrase is being used because Mighty River Power's prospectus has to be registered under United States securities laws on account of the fact the company has thermal generation assets in the US.

The strict rules around the partial listing means brokers are restricted about what they can tell their clients about the deal and how they go about contacting them.

A record number of people have pre-registered to buy Mighty River Power shares.

As of noon yesterday, 290,659 had signed to take part in the Government's partial sell-down of the power company.

That is nearly 50,000 people more than the number who signed for Contact Energy's float in 1999.

There are still two weeks to run before the pre-registration process closes.

Those who sign up do not have to commit money now, but are being offered the chance to gain up to 25% more shares if the offer is oversubscribed and has to be scaled back.

An offer document for the float is expected to become available in mid-April, ahead of its listing in May.