Former port company chairmen Sir Clifford Skeggs, left, and
Ian Farquhar are passionate that control of Port Otago, and
the benefits to Dunedin and wider Otago community, must
remain in 100% Otago ownership. Photo by Craig Baxter.
The proposed merger between Port Otago and rival
Lyttelton Port of Christchurch is being roundly criticised by
former port company chairmen Sir Clifford Skeggs and Ian
Farquhar, with both men calling for the idea to scrapped.
Business reporter Simon Hartley looks at why
the pair are so adamant the deal is no good for Otago.
The scene is set for the almost two-year-old proposed merger
between Port Otago and Lyttelton Port of Christchurch (LPC)
to become one of the most contentious issues faced by
southern local bodies and ratepayers in decades.
At stake are local jobs, millions of dollars in dividends and
the ability of Port Otago - which favours the merger - to
steer its own course in the ever-changing, highly competitive
and complex shipping sector.
Port Chalmers is the lifeblood of primary-producing Otago and
maintaining its independence is crucial to Sir Clifford
Skeggs and Ian Farquhar, both of whom have 40 years of
wide-ranging experience in the sector, from the late 1960s to
the present.
Both aged 79, the men have served with both the Otago Harbour
Board and its successor Port Otago; Sir Clifford for a total
of 22 years, including chairman for 15 years between the two
entities, and Mr Farquhar for 30 years, including chairman
for seven years.
"There is nothing worthwhile in this [merger] proposal for
Otago. Port Chalmers is more competitive and capable than
Lyttelton. The theory of `greater economies of scale' is
absolutely bullshit," Sir Clifford said.
Port Otago is 100%-owned by the Otago Regional Council while
LPC is listed on the stock exchange, being 78.7% owned by the
Christchurch City Council and 15.48% by Port Otago.
"There's no doubt in my mind that Port Otago will deliver
better returns to its shareholder over the next decade, and
beyond, on its own than needing to get involved with
Lyttelton," Mr Farquhar said in a submission to the Otago
Regional Council for its draft annual plan.
The merger proposal evolved between the usually fierce port
company rivals in 2008, after Port Otago took a controlling
and contentious $37 million, 15% stake in Lyttelton in March
2006, essentially gatecrashing and stopping a proposed
takeover and delisting of the company so owner Christchurch
City Council could bring in an international management
company to oversee the ailing port.
The ports repeatedly said no formal talks were under way, but
in October 2008 they jointly announced the merger proposal.
Further details have since been largely shrouded in silence.
Similarly, an independent report subsequently undertaken and
completed by Antipodes Capital on the proposal has been
delivered to the working parties of LPC and Port Otago, but
not released publicly.
The lack of comment, or availability for comment, is because
as a listed company LPC must inform the sharemarket first of
any changes which could affect its share price; neatly
curtailing any necessity to respond to questions on details
of the merger proposal.
Port Otago chairman John Gilks said, when contacted, that for
confidentiality reasons he could not reveal further details
but said the Antipodes report "ultimately concluded there was
a clear and sound case for the merger of the [two ports']
business operations".
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