Ratepayers contributions to the $188 million Awatea St stadium could be slashed by almost $37 million if Port Otago's contentious 15.5% stake in rival Lyttelton Port Company (LPC) was sold.
Research released yesterday by broker ABN Amro Craigs on the financial performance of listed LPC also outlined how the company could potentially find a new ally, if Port Otago was to sell its shares in LPC.
"We note that Port Otago's 15.5% stake in LPC of $36.9 million would comfortably cover the Otago Regional Council's required contribution to the stadium without the need to incur further debt on levies on ratepayers," the research said.
The council proposes to borrow $37.5 million and repay part of the loan, via $15 million in special dividends, from Port Otago over three years.
Release of the ABN research yesterday coincided with an ORC meeting to decide on whether to contribute $37.5 million for the project.
The move was backed 7 votes to 4.
Port Otago is 100% owned by the regional council, and has delivered more than $44 million in dividends during the past 10 years.
LPC's majority stakeholder, at 75.01%, is the Christchurch City Council.
In April 2006, Port Otago grabbed its stake in LPC, effectively blocking Christchurch City Holdings Ltd's bid for a 90% takeover at the time, which would have then led to a sale to foreign ownership.
Port Otago chairman John Gilks was unavailable for comment yesterday, but has always maintained the LPC purchase was for the the two ports to be "more aligned" in the uncertain times of potential port rationalisation by giant shipping lines.
It is understood, however, no formal talks, have been held between the southern rivals.
ABN Amro Craigs broker Peter McIntyre said if Port Otago's 15.5% stake came on the market it was likely to be sold with a premium on the present share price.
While the stake would not be attractive to an aggressive buyer, because Christchurch City Council owned the majority 75.01% stake, a "new strategic partner" could emerge.
Last September, Port Otago delivered a record $6.9 million dividend to the ORC, boosted by almost $1 million from dividends paid by LPC to its southern rival.
Port Otago's shareholding in LPC rose in value by $6.5 million, compared with what it had originally paid.
