LPC $450m quake settlement

Lyttelton Port of Christchurch (LPC) has reached a ''full and final'' $450 million earthquake settlement with its three insurers, after years of negotiations.

With a full lump-sum payout and a free hand to rebuild whatever assets it wants, when it wants, LPC is well placed to raise the competition bar with Port Otago in the bid to be the South Island's leading port.

LPC placed its shares on a trading halt at the opening of the stock exchange yesterday, before announcing the settlements about 1pm yesterday.

LPC, which is 75% owned by the Christchurch City Council and 15% by Port Otago, was hard hit by the earthquakes three years ago and insurance negotiations had stalled some recovery plans, but the port had been functioning throughout.

Its shares were at a year high of $3.10 in mid-November but had steadily been falling to trade at $2.41.

However, they were up 10% at $2.65 after the announcement, albeit on small volumes.

After mediation with Vero, NZI and QBE, it had been agreed that all claims for material damage, business interruption and contract works insurance policies, from quakes in September 2010, February 2011 and June 2011, had been settled, LPC chairman Trevor Burt said in a statement.

''All of the sums received will be expended over time in the rebuilding and reinstatement of Lyttelton Port's facilities. The port has flexibility on how and when assets will be reinstated,'' Mr Burt said.

Craigs Investment Partners broker Peter McIntyre said that the payout would give LPC ''a great deal of flexibility. It would rebuild and have the most modern, unrivalled facilities in the country.''

Its rebuild would raise the competition with Port Otago, as both competed for commodity and dairy exports and container trade in general, he said.

Of the full settlement of $450 million, including GST, $55.6 million has already been paid out, full payment of $382.7 million, plus GST, being due by February 28.

''This [payout] enables LPC to rebuild the port, with freedom to optimise facilities for the future,'' Mr Burt said.

LPC is looking to get in place contract works insurance cover, including earthquake cover, for the rebuild programme.

Work was progressing on rebuilding Cashin Quay and he expected to be able to fully insure it, including earthquake cover, once completed, as with all assets after rebuilding, Mr Burt said.

An unspecified ''outstanding matter'' with an unidentified third party remained, which could provide an ''additional recovery'', but he could not provide further details, Mr Burt said.

 

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