Port Otago makes gain on Lyttelton Port of
Christchurch shares. Photo by Craig Baxter.
Port Otago has scored a financial coup against its competitor
Lyttelton Port of Christchurch, having squeezed a 14%-23%
premium on the share price in order to sell its 15.5% stake.
A report from the independent adviser yesterday recommends
Port Otago's offer be accepted, noting the ''significant
premium'' may have been needed to win Port Otago's support,
which allows LPC's owner the Christchurch City Council to
gain 100% control.
Last month LPC, which holds 80% of LPC, offered all
shareholders $4.15 per share; which includes a special 20c
Yesterday, the independent adviser's report was released and
estimated the full underlying value of LPC's shares was in a
range between $3.35 and $3.65 per share, equating to a
respectively 23% to 14% premium for Port Otago.
Port Otago purchased the shares in 2006 for $37 million and
with the additional value and premium combined, will get back
$65.7 million, which it has already earmarked mainly for
The independent advisers said: ''We suggest that the
significant premium contained in the total offer
consideration could potentially be attributed to the
additional value that CCHL [Christchurch City Holdings Ltd,
the wholly-owned investment arm of the Christchurch City
Council] needed to offer Port Otago in order to secure
agreement to acquire its shares.''
CCHL cannot move to a 100% ownership position without buying
the Port Otago shares and it may have determined that paying
the premium for the shares it does not already own is more
than compensated for by the strategic value gained by moving
to 100% ownership, the advisers said.
Two days ago LPC's board backed the bid for it to buy Port
Otago's 15.5% stake, meaning it can now compulsorily mop up
the outstanding 10% of shares.
Craigs Investment Partners broker Peter McIntyre said the
independent advisers' report was a ''fait accompli'', for the
takeover to go ahead, unimpeded.
''There's no likelihood of another offerer coming in at this
stage,'' Mr McIntyre said.
Last week LPC booked increased revenue and several records in
cargo handling for its full-year result, repeating last
year's, earthquake-adjusted, after-tax profit of $15.1
Container handling was up 7.2% to a record 376,567 TEUs (20ft
container equivalents), dry bulk imports were up 18.4% to a
record 769,019 tonnes and log export volumes were up 62%, at
However, since the result was booked last week, LPC lost a
third staff member in a year following an on-site accident,
prompting widespread scrutiny and criticism.
LPC chairman Rodger Fisher said although the first half of
the year was a challenging period for the company, the last
six months of the financial year showed strong growth, with
increases in both export and import container volumes.
''In total, LPC moved 9.8 million tonnes of cargo through the
port this year, an increase of 3.9% on 2009, driven by export
container, log and vehicle volumes,'' he said.
On the takeover question, LPC said in a statement: ''The
board and management of LPC are fully committed to the
negotiations, as it remains our belief that amalgamation is
crucial for the long-term viability of New Zealand ports.''
Mr McIntyre said while the LPC's profit was ''like for
like'', the company had hit several cargo handling records.
''The agricultural sector has helped out big time,''Mr
McIntyre said of the fertiliser, grain and logs.
LPC had received $55.6 million from insurers for damage,but
on February 28 it got a total $382.7 million, plus GST.
The company said there was one outstanding insurance matter,
which may deliver an additional recovery, but declined to
give any further details.