Lyttelton Port of Christchurch (LPC) shares soared to a
record high yesterday, prompting Port Otago to confirm that in
February next year it will, for the first time, consider
whether to sell its stake.
LPC shares spiked to a record $3.24 yesterday before easing
to around $3, having briefly boosted Port Otago's contentious
15.5% stake by more than $13 million, to $51.2 million.
LPC announced on Thursday it had secured full and final
payment of $450 million from its earthquake insurers.
Port Otago's stake was purchased for about $37 million in
March 2006, effectively blocking the sale of LPC at the time,
but no dividends have been paid since the earthquakes three
years ago, raising questions over the value of the holding.
Port Otago chairman Dave Faulkner, contacted yesterday, said
the insurance payout and subsequent share price boost was
''good news for Lyttelton and also us, as shareholders''.
Port Otago, which does not have a director on LPC's board,
has maintained it wanted to hold the stake long-term.
However, Mr Faulkner said given a gain of almost 40% on the
shares, the Otago board would consider the holding when it
met in early February for its annual strategy meeting.
''We'll have to look at our options then ... to hold or
sell,'' Mr Faulkner said.
While the $450 million insurance payout may appear to some as
a war chest for development to rival Port Otago's plans, Mr
Faulkner said he was ''not unduly concerned''
LPC might ramp up South Island competition.
''The insurance payout takes them back to neutral, what they
had before the earthquakes. They will just be replacing
damaged infrastructure, wharves,'' he said.
LPC had signalled separate $500 million spending on port
development in coming years, but Mr Faulkner said Port Otago
had its own development plans, including channel widening,
and ''was comfortable'' with its strategies.
The Christchurch City Council is the majority shareholder of
LPC, with 75%, and would appear to be the logical buyer. Mr
Faulkner said Port Otago would, in February, consider whether
to initiate negotiations with the council.
''At around $3 per share, that's what'll be under
Craigs Investment Partners broker Peter McIntyre said the
market was likely to re-rate LPC positively, due to the
insurance payout, and noted that while a record price was
touched, it was on light volume.
In August, LPC recorded record freight volumes through
Lyttelton and in a November market update, it had suggested
some potential to pay dividends.
''LPC has been performing quite well, given it is in a
[earthquake] damaged state,'' Mr McIntyre said.
For its year to June, LPC booked a 9.2% rise in container
terminal volumes, to a record 345,940 containers, dry bulk
imports were up 11.2%, log exports gained 30.9% and car
imports rose 24.6%.