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