Port Otago has reaped a massive profit selling its
contentious shareholding in rival Lyttelton Port of
Christchurch (LPC) for $65.7 million, a 77% gain on the
The port company, 100% owned by the Otago Regional Council,
will use all the windfall cash to slash debt, from $110
million to about $45 million, Port Otago chief executive
Geoff Plunket said when contacted.
''We're happy and very pleased with the outcome,'' he said.
He declined to detail the process of how the sale came about,
saying only Port Otago had recently engaged consultants to
negotiate a price.
Port Otago is locked in to sell all its 15.48% stake - which
it bought in early 2006 for $37 million - to the Christchurch
City Council, which has an 80% stake in LPC.
The $3.95 per share takeover offer price was an almost 10%
premium on recent LPC share transactions.
Port Otago chairman Dave Faulkner said the board had decided
the 15.48% stake no longer had the strategic importance which
applied at the time of the purchase.
The stake was contentious, in that Port Otago's holding
formed a blocking stake which stopped the Christchurch City
Council in 2005-06 from selling the port to an overseas port
There was no small irony in that Cantabrians against the
proposed sale were vocally supportive of Port Otago having
The sale comes about from Christchurch's council launching a
formal takeover for LPC yesterday and striking a ''lock-in''
agreement with Port Otago to sell.
That gives the council more than a 90% stake, so it will now
compulsorily acquire the remaining about 5% of shares, and
delist LPC from the stock exchange.
Port Otago has been criticised for having tied up the more
than $30 million in cash, with few dividends from quake-hit
LPC, getting little in return for its investment.
Port Otago had for more than seven years maintained it would
keep the LPC holding long-term, but first hinted to the ORC
in April it would consider selling.
Port Otago, which has paid the ORC almost $130 million since
1988, last week lowered its dividend policy to 50%-70% of its
operating surplus after tax, but with ''intent'' to deliver
$7 million per year.
ORC chairman Stephen Woodhead said yesterday the ORC ''fully
supports'' the LPC share sale.